There is a lot of great information available on life insurance for parents, most of which is targeted towards young and middle-aged adults with children. While it is essential for those with children to have a financial strategy for the future, it is also important to consider purchasing life insurance for elderly parents.
With their consent, you can purchase life insurance for your parents. In fact, if you’ll be responsible for their final expenses, it’s something you might want to strongly consider.
Why Might I Consider Purchasing Life Insurance Policies for My Parents?
Parents are typically the ones who take care of you for the first couple of decades of your life. At some point, years after you’ve flown the nest, your aging parents might need you to support them. This can look like having an elderly parent move in with you, covering the costs of medical bills or funeral expenses.
While a life insurance benefit is only awarded after the insured passes away, the payout can be used however the beneficiaries see fit. If you take out life insurance on your parents, the money you receive from the policy could be used to pay down medical debt or to cover the costs of a memorial service.
How To Buy Life Insurance for Parents
There are laws in place that prohibit people from running out and buying life insurance policies on any person of their choosing—and that makes a lot of sense when you think about it. Imagine the movie plots if that weren’t the case. To take out a life insurance policy on another person, you need to prove what is called insurable interest.
In the case of life insurance for parents, this means you will need to demonstrate that the death of your parent (or parents, if you are buying a policy for both of them) would result in a financial loss or hardship for you, the surviving person.
If you are wondering how to get life insurance for a parent, start with these three steps:
1. Talk to your parents about life insurance. Life insurance is a delicate subject. Some people can talk about their death practically, while others prefer to avoid the subject at all costs. With your parents’ feelings in mind, set aside time to talk about their finances and wishes for the future. Before buying life insurance for parents, their consent is required. If you take out a policy on one of your parents, that parent needs to be on board and is required to be legally competent when they sign the insurance paperwork.
2. Choose a life insurance policy. The next thing you will want to do is pick the best policy for you and your parents. Life insurance is not one-size-fits-all. There are many different types of policies and various insurance coverage options within those types. “What are the best life insurance policies for my parents?” is a commonly searched question. While “best” is a relative term, you can scroll down to the next section to read a list of options to consider when shopping around for life insurance for elderly parents.
3. Name a beneficiary. If you are buying life insurance for your parents, you are likely going to want to name yourself as a beneficiary of the policy. Beneficiaries are the people who receive the policy’s death benefit. But, plot twist, you can have more than one beneficiary on a life insurance policy. If both of your parents are alive and married (to each other) or if you have siblings, you might want to think about adding them as beneficiaries as well.
Types of Life Insurance Policies for Parents
This section will focus on term life insurance, whole life insurance, final expense insurance, and guaranteed issue life insurance. While there are certainly other options out there, these are some of the more common choices when it comes to life insurance for a parent.
Term life insurance: If you need life insurance coverage for a parent, but only for a specific period of time, check out term life insurance. Let’s say your parents have ten years left on their mortgage. It might be a good idea to take out at least a ten-year policy so that you can cover the costs of the house if anything were to happen to them. Or on the flip side, if you are still paying off student debt and know you can’t handle the funeral expenses, you might want to think about taking out a term life insurance policy that lines up with the cost of the type of memorial service you and your parents envision.
Whole life insurance: This is a type of permanent life insurance. While it is pricier than term life insurance, the policy never expires (as long as you make the premium payments). If you want a policy that lasts your parent’s lifetime, consider some type of permanent life insurance like whole life or universal life insurance.
Final expense insurance: Life insurance premium prices are determined by a series of factors that make up an applicant's risk class. Premiums for older people and those with health issues are typically on the high end. If this is a concern, you might want to look into final expense insurance, a type of life insurance designed to cover funeral and burial costs. The death benefit is typically lower than that of a whole life insurance policy, but the premiums are usually less costly.
Guaranteed issue life insurance: If you’ve hit a few life insurance roadblocks due to a parent’s health issue or age, you may find a solution in guaranteed issue life insurance. The premiums are typically high, and the coverage amount low, but some insurance is better than no insurance.
Are There No-Medical Exam Life Insurance Options?
If your parent is in excellent health and they are not a fan of getting blood draws or undergoing medical exams, you might want to consider no-medical exam term life insurance. Instead of requiring an applicant to undergo a medical exam and submit blood samples, an insurance company that offers no-medical exam life insurance will use technology to review an applicant’s medical history.
One important note (so important that we are emphasizing with bold typography) concerning online life insurance is that most insurance companies with 100% online platforms require applicants to fill out the insurance application independently and unassisted. In this case, your parents would take care of the application part, but you could still pay the premiums and be listed as beneficiary.
With Bestow, you can skip the medical exam (and the lab tests). Everything is online and the straightforward term life insurance application can be completed in minutes. And the best part? Most get an instant decision.
Get an idea of what your term life insurance options might be with an instant free quote. No pressure. No obligations. Just simple, helpful info.
Key Takeaways
- If you have their consent and they are legally competent to sign the paperwork, you can get life insurance for your parents.
- Choose a life insurance policy that works for your family’s needs — there are several different types of life insurance to consider.
- No-medical exam term life insurance is a great option to consider if your parent is in excellent health and you are looking for coverage for a specific period of time.
