As parents get older, it’s more important than ever to make sure they’re well taken care of. In addition to helping maintain their homes, taking them to doctor check-ups, and so on, there will come a time when you may want to purchase life insurance for them too.
Life insurance is an excellent tool that helps to limit financial hardship and make sure your entire family is covered in the case of one parent’s death.
In the United States,it’s possible to purchase life insurance for a family member, including your parents. However, there are a few things to know before getting into how to buy life insurance for your parents.
Term life or Whole life Insurance for a Parent?
When purchasing life insurance for your parents, the question of whole or term life insurance may come up. Because you’re generally purchasing the life insurance at a later stage of your parent’s life, it is recommended that you stick with the best term life insurance policy you can find.
The alternative – a whole life insurance policy – is catered toward healthy, younger individuals. Your parent may not qualify, but it also does not make financial sense to invest in a whole policy later in life.
How Do I Get the Best Term Life Insurance for Your Parent
One of the most important components of taking out a life insurance policy on your parents is their consent. The exact process will look different for every application, but you can expect your parents (and you) to fill out paperwork verifying information with the life insurance agency.
Things the life insurance agency will check for include an insurable interest – as in you have a reason to benefit monetarily in their passing – their personal information, health, and other factors relating to your parent’s insurability.
Why Do I Need Life Insurance for My Parents?
If you’re not sure whether life insurance for your parents is a tool you need, remember life insurance for your parents can help:
Funeral Costs: End-of-life services can be a major financial burden if you’re not prepared. You may use a life insurance beneficiary amount for the funeral proceedings or any other costs related to your parent’s wishes.
Debts: One of the greatest financial obligations anyone carries is their debts. Whether it be outstanding credit card costs, liens on properties, forgotten about payments, and so on. While the costs are sometimes taken as a loss by the lender, they may demand you pay up as a parent’s next of kin. In those cases, proceeds from a life insurance policy can be invaluable.
Living Expenses:Provide funds for senior care, including care assistants, residential care facilities, or living costs if they move in with you. While these funds may not be available before the demand for them, the beneficiary amount may help to reimburse you.
Steps for Obtaining Life Insurance for Parents
Ready to move forward with purchasing a life insurance policy for your parents? These are the steps you’ll want to keep in mind:
- Speak with your parents about why life insurance may benefitthem.
- Obtain their explicit consent and notify them that they will be involved in the execution process.
- Discuss who the beneficiary or beneficiaries will be for the policy. If you have siblings who also help care for your parents, be sure to iron this out early on.
- Shop for life insurance policies that fit your unique needs. You may find that a senior-specific policy is an answer or that a general term policy is best.
- Speak with professionals, like a financial planner, to help understand what your options are and what makes the most sense for your family.
The Bottom Line
Purchasing life insurance for your parents can be stressful, but with the right information and support from a life insurance agent, the process can be streamlined. Keep in mind that you’ll have to meet certain qualifications to purchase a policy on their behalf. It’s also important to compare different policies and companies to find the best coverage and rates. Finally, keep the policy in force by paying the premiums on time.