You can get life insurance for your parents to help them with their final expenses. It provides some comfort to your family during this difficult time. To purchase a policy on a parent, you will need their consent as well as proof of insurable interest.
The type of policy you purchase will be determined by their age, financial situation, and overall health. When it comes to preparing for the death of a loved one, having life insurance is critical (learn what to do when a loved one dies). It is critical to obtain life insurance for parents that will provide the most support for you on one of the most difficult days of your life.
Buying Life Insurance for Parents: A Step-by-Step Guide
The reason people buy life insurance is to protect their loved ones from financial hardship if they die. Part of protecting them is protecting yourself, particularly from unforeseen bills that could financially impact you.
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When a parent dies, surviving loved ones are frequently left with the bills and may lack the resources necessary to handle any end-of-life expenses their parents may have left behind, such as medical bills or hospice care. Not to mention the tens of thousands of dollars required to cover their funeral costs.
By demonstrating how to buy life insurance for parents, the following steps can help protect you from financial hardship if your parents die:
Determine how much coverage they require.
Depending on the style of service, the average funeral can cost $9,000 or more. This price may not include additional services such as transporting the remains, viewing at a funeral home, purchasing a tombstone, or purchasing a burial plot. Obtaining estimates from several local funeral homes can assist you in determining the final cost and determining which services are appropriate for you. Finally, include any debt or final expenses that your family may have, such as unpaid medical bills. You should now have a good idea of how much life insurance to purchase.
Find a policy that meets their requirements.
Today, there are numerous types of life insurance policies available. Before selecting a policy, take a close look at what it offers and ensure that it specifically covers the things you need covered. Just because a plan is less expensive on a monthly basis does not mean it is the best policy for your needs.
Determine who will own and pay for the insurance policy.
In most cases, you’ll need your parents’ permission to purchase a policy on their behalf. This consent is typically obtained by having them sign the insurance application. In some cases, a medical exam (also known as a life insurance exam) will be required.
You must be able to demonstrate “insurable interest” in order to purchase insurance on behalf of someone else. If a person would be financially impacted by the insured’s death, they have insurable interest. In most cases, family members are automatically insurable.
Aside from demonstrating insurable interest, some companies may require the insured to take a medical exam or sign an application to qualify for insurance. These requirements are determined by a number of factors, including the amount of coverage.
Some companies will provide life insurance without a medical exam for smaller policies. These policies are typically issued in response to answers to health-related questions on the application.
Your specific circumstances will determine who is best suited to own the policy. Typically, the person who pays the insurance premiums is also the policyholder. Some policies may specify who must be the owner. Your insurance agent can assist you in selecting the best owner and walking you through the available options.
What Is the Best Parental Life Insurance?
Aside from your parents’ overall health, one of the most important factors in determining what life insurance is best is their age. Different age groups will require different types of protection.
- Age 25-40: A term policy makes the most sense for younger parents because you want to protect things like your mortgage and car payments. Because term insurance is primarily used to replace any income a family would lose, the monthly premiums are typically lower and the coverage amounts are much higher. The coverage is only for a set period of time (usually 10 – 30 years), and these plans usually require medical exams to qualify.
- For parents between the ages of 40 and 85, whole life insurance is usually the best option. These policies typically accumulate cash value and will continue to cover you as long as premiums are paid. Even if you’ve had difficulty qualifying in the past, you can usually qualify without taking a medical exam in most cases. The lower your premium will be the younger and healthier you are, so it’s important to lock in a low rate early on in case your health changes. Seniors over the age of 60, and especially seniors over the age of 70 and 80, pay significantly higher rates than younger parents.
Is it possible to obtain a policy for parents without their consent?
Most of the time, the answer is no. You are not alone if you are having difficulty convincing your parents to purchase insurance for them. It’s difficult to talk to your parents about life insurance and their final arrangements. However, having this discussion can be beneficial in a variety of ways. Eighty-nine percent of adults over the age of 40 believe it would be beneficial to discuss end-of-life wishes.
It is critical to explain the purpose of the discussion. Make it clear that you intend to support their wishes exactly as they have described them. Set aside time to talk about how they want to be remembered and how much life insurance is needed to cover their final arrangements.
You don’t want to purchase life insurance for parents who are worried about the policy. If you need assistance in having this conversation, go to The Conversation Project for tips and tools on how to make the conversation go as smoothly as possible.
Once your parents understand the importance of life insurance, you can proceed with the above-mentioned steps.
What Is the Ideal Amount of Coverage?
The answer varies depending on who you ask. Consider your parents’ total debt, any monthly expenses/medical bills, and the type of funeral services they prefer. With the average funeral costing around $9,000, funeral expenses are not something that most Americans can afford on the spur of the moment. The federal government will only pay your family $255 if you qualify. This leaves a significant portion of funeral expenses to be paid for by surviving loved ones.
You can purchase a type of life insurance called final expense insurance to help cover your parents’ funeral expenses.
It is specifically intended to assist in the payment of final expenses such as unpaid medical bills, funeral arrangements, and other end-of-life expenses.
A life insurance agent can assist you in determining the appropriate amount of coverage for your needs.
What will it cost?
The cost of life insurance is determined by a number of factors. The age and overall health of the insured are the most important factors. Term insurance is typically less expensive, but it can be difficult to qualify for if you have pre-existing conditions and must undergo a medical exam. Whole life policies have higher premiums, but they also include benefits that most term policies do not (including cash value and faster claim payouts in some cases).
Finally, the amount of coverage you purchase will determine the cost.
What Are Some of the Benefits of Purchasing Life Insurance for Parents?
- You require assistance in paying for their final arrangements. Funeral services are more expensive than they have ever been, and this trend will continue. Many families underestimate the cost of funerals, which vary depending on the final arrangement (funeral or cremation) and the items chosen for the service (casket or urn, flowers, obituaries, transportation, use of a funeral home for viewing, etc.). Caskets alone can cost thousands of dollars to families. Life insurance proceeds, especially if received quickly, can help cover some of these costs.
- You require assistance in paying their medical bills. The last few years of a person’s life are frequently the most expensive. Depending on their health, your parents may require costly prescriptions or medical treatments, more doctor or hospital visits, and round-the-clock care. They may need to be admitted to a hospice facility in their final days. All of these medical expenses can be difficult to cover if you have your own family. A small life insurance policy can help cover any unpaid medical bills.
- You require assistance in relocating your surviving parent. When one of your parents dies, the surviving parent may find it difficult to live alone. If their surviving parent lives out of state, many children will relocate them or place them in an assisted living facility. The process of selling and relocating can cost thousands of dollars or more. Purchasing life insurance for your parents can help cover these costs, saving you and your loved ones thousands of dollars out of pocket.
In conclusion
It’s natural to want to shield your parents from harm. They did, after all, raise you.
But does your desire to assist Mom and Dad include purchasing life insurance for them? Yes, it can. You cannot, however, surprise them with the gift of a life insurance policy. To purchase coverage on them, you’ll need their permission. You may also need to demonstrate that you would suffer financially if they died, such as if you rely on them for financial support.
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