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Life Insurance Basics

Can I get life insurance on my parents?

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At some point, adult children may need to have a conversation with parents about their end-of-life wishes. What funeral arrangements should be made? What happens to the remaining parent? And how will these things be paid for?

Life insurance is an important part of that conversation, and adult children may face questions about taking out a life insurance policy on parents. Read on for basic information that could help as you consider if this is an appropriate option for you.

Do my parents need life insurance?

There are several reasons that might prompt you to take out a life insurance policy for your parents. One of the most common is that you need help paying for their final arrangements. Funeral services can be expensive, and life insurance can help cover those costs.

You also might need help covering their medical bills. Parents in poor health might need more care, especially in their final days. A life insurance policy can help you cover lingering bills after they pass. Some policies also offer living benefits that help cover those costs while the parent is still living.

Finally, a life insurance policy can help care for a remaining parent when their partner dies. This can cover various senior care costs, including medical care and housing.

How to get life insurance on a parent

Begin by discussing the option with your parents and any other family members that you want to include. Determine what the coverage is for and ensure that they are comfortable with it.

Once everyone has agreed that a policy would be useful, assess the amount of coverage that the family would need. Then, find a suitable policy that fits the parent's needs. Finally, decide who will own and pay for the policy.

Demonstrating insurable interest

To take out a life insurance policy on a parent, you must prove insurable interest. This demonstrates that you would incur a financial liability if that person were to die. You can prove this insurable interest during the application process, typically by talking to an agent.

How much coverage should the policy have?

Each family's needs will be different, but there are some common factors that can help you to calculate the necessary coverage. Consider your parents' end-of-life needs, specifically funeral services, and make an allowance for any end-of-life medical care they might need. Add in the monthly expenses, including medical costs, that the remaining parent would have to pick up, and factor in any change of life costs such as relocation.

One factor that many people forget is parental debt. It is wise to factor this into the coverage so that the remaining parent can continue the rest of their life without that burden.

Can I buy life insurance on my parents without their consent?

One common question is, "Do you need permission to get life insurance on someone?" You must get a person's consent before taking out a life insurance policy on them, and that includes your parents. Even if they don't require a medical exam, they still need to answer application questions on their own, and they must help prove insurable interest.

Conversations about a life insurance policy for parents can be awkward, but there are aids. For example, the Institute for Healthcare Improvement runs the Conversation Project, a site that helps people have conversations about their wishes for what happens when they die.

Which type of life insurance should I buy for my parent?

There are several kinds of life insurance policies for parents. The first is a term policy. This option, which often requires a medical exam, is better for those with younger parents. It offers higher coverage which can replace any income that they are still earning and can also help to cover the costs of an outstanding mortgage. The monthly premiums on these policies are often lower than permanent life insurance. The downside is that they only apply for a finite period, after which the benefit ends.

Those seeking life insurance for elderly parents might consider whole life insurance. These policies remain in force as long as the required premiums are maintained and can build cash value.

Other types of life insurance include a policy dedicated to final expenses.

Having conversations and making decisions together about life insurance can help your whole family enjoy your parents' remaining years with peace of mind.

Considering life insurance for yourself or a family member? Learn more about your life insurance options.

 

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All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

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