How to Buy a Life Insurance Policy on Your Sister

My neighbor Dave learned a hard lesson last year. His sister passed away unexpectedly, leaving behind two teenagers and a mortgage she'd cosigned with him. Dave became responsible for $180,000 in debt with no life insurance to cover it. "I wish we'd had that conversation," he told me. "I just didn't know it was possible to insure her."

You can insure your sister's life. And for millions of Americans, it's not cold or calculating—it's practical family protection.

What Is Insurable Interest and Why It Matters

Insurance companies don't let you bet on just anyone's life. You need "insurable interest"—proof that your sister's death would hit you financially. According to the Insurance Information Institute, about 30% of life insurance claims involve policyholders who aren't spouses.

Here's what qualifies:

• You cosigned loans or a mortgage together

• She provides free childcare so you can work

• You run a business together

• You'd inherit her debts or final expenses

If her death would cost you money, you have insurable interest.

Step-by-Step: How to Buy a Policy on Your Sister

Step 1: Have the real conversation
Sit down with your sister. Be honest: "I want to make sure we're both protected financially. Can we look into life insurance together?" Most siblings appreciate the care behind it.

Step 2: Gather health information
Insurers will ask about her medical history, smoking status, and family health. A 45-year-old nonsmoking woman pays around $35 monthly for $250,000 in term coverage, according to 2024 rate data from Policygenius. The same policy for a smoker jumps to roughly $85.

Step 3: Compare insurers
Don't settle for the first quote. Rates vary by up to 40% between companies for identical coverage.

Step 4: Complete the application together
Your sister must sign. Some insurers require a phone interview with her. No secrets allowed.

Step 5: Name beneficiaries thoughtfully
You can name yourself, her children, or split the payout. Be specific.

The Real Benefits You're Buying

A policy on your sister isn't about profiting from tragedy. It's about:

• Covering final expenses—funerals average $9,000 nationally

• Protecting shared debts—that mortgage or business loan doesn't disappear

• Funding her children's future—college, daily expenses, stability

• Replacing her contributions—childcare, household help, family support

Consider Jennifer from Ohio, who insured her sister—a single mom working two jobs. When cancer took her sister at 42, the $200,000 payout kept Jennifer's niece in her home and through high school. "It was the hardest money I ever received," Jennifer says. "But it meant my niece didn't lose everything."

Ready to Protect Your Family?

You can't predict what happens to the people you love. But you can make sure their loss doesn't destroy the family financially.

Get free, instant life insurance quotes from top-rated insurers today. Compare rates, see actual prices, and find coverage that fits your family's needs. There's no obligation, just information that could save everything you've built together.