Your friend has been watching way too many murder movies. In holywood it maybe legal, but in the real world it wont happen. Take your friend through this logic:
Insurance companies are all in the busienss of making money, like any other business. Would it be smart to issue policies (obligations to pay) without knowing anything about who you are insuraning? Things like health checks, drivers licenses, social security numbers are all needed to verify that the person is a true person. Other wise someone could theoreticaly take out a life insurance on a non existant person, then claim this person died one day after the contestation period (two years), and be paid the face amount of the policy! That is not a good way for the insurance company to make money... maybe for the person buying the policy, but not the insurance company.
Oh and by the way, there are federal laws against buying insurance on someone without their consent. There are Third party owned life insurance policies... these are very dangerous and most often scams. This is were someone has had a life insurance policy, and "sells" the policy to someone they don't know. there is a transfer of ownership, where the premiums are picked up by the third party, and beneficiary becomes the new owner. There is a federal look back period of three years when it comes to estate taxes, so if the person dies within three years of "selling" the policy the Face Amount of the policy is included in their gross estate. This can cause huge tax problems down the road. If anyone out here reading this is approached by someone who wants to buy your life insurance policy, beware!
Life agent/financial advisor 2 yrs
financial industry 7+ yrs
· 1 decade ago