Is that even legal? Ethical? Moral? I mean, the person you would be buying the life insurance for would know you were doing it, so what would be wrong with it? I imagine it would take some heavy lifting mathematically to figure out your investment in the policy and your payout should the person die versus just investing the money yourself in the market or some other vessel, but still…I wonder if it would work. I wonder if it is being done by anyone. Whether paying the “client” under the table on a monthly basis or paying the policy outright, the idea fascinates me.
I mean, I could go buy a policy on my life and name anyone I wanted as a beneficiary – so why couldn’t it work in reverse? Let’s say I bought a policy on a parent and named myself as beneficiary – how is that any different than the first scenario? If one did the math and decided that was a good way to “set aside” $X.XX per month, would there be any problems with any regulatory agencies?
Basically you would be gambling on the futures of people you know by purchasing term life insurance on them. I wonder…What do you guys think? Also, How much life insurance should you buy if you can?