Can’t you take out a life insurance policy on a stranger? How does one go about that?
The general rule is that you have to have an "insurable interest." Meaning that you would be harmed if the property was or person was damaged or destroyed, and the insurance is meant to make you whole.
Which is one of my pet peeves about the last big financial crisis. You could not only buy speculative investments that would protect you if an investment you already owned defaulted, you could buy them even if you did not own that investment.
Which means they had a financial incentive to see the investment default, because they would be compensated for a loss they never incurred.
Its like allowing members of the public to buy insurance on the life and brand new sports car of the spoiled rich kid who lives down the block. They then have a financial incentive to give him bottles of whiskey and whisper in his ear that girlfriend is cheating on him.