Can life insurance be taken out on another person legally and does the other person have to be notified about the policy?

Yes, insurance can be taken out on anyone.

NO, NO, NO and NO! It is not legal to take out life insurance on someone else, unaware and who has not authorized such for the purpose of naming youself as the payoff collector or benneficiary rather.

However that does not mean people do not do it everyday but be careful because if your insured is unfortunate enough to pass away as a result of Murder or unexplained homicide you could be in for serious legal problems trying to prove yourself innocent. Good luck and be SAFE!