Maybe you’re in the stage of your life where you’ve just purchased life insurance for yourself and for your space, and now you’re wondering if there’s something you are missing in your financial puzzle. Do you need to purchase an insurance policy for your ageing parent? Things can get very overwhelming if the unexpected death of a parent happens, and that’s prior to ever considering the financial implications.
Life insurance can greatly help if you’re looking for a fixed long-term investment or a way to protect your family if someone dies. It can provide either financial protection and a way to develop your estate, but it can be difficult to pick the right policy. It doesn’t matter what the reasons you have for buying life insurance for your parents because it’s the right decision when you want to feel fully prepared for life’s incidents. However, what does it involve? Here is more information if you would like to find out its importance. Plus, we added a guide that covers how to purchase life insurance for your parents.
Can I Really Buy Life Insurance For My Parents?
It can be difficult to prove if you’re applying for this type of insurance if you’re an adult child buying a policy for a parent— most of the time it’s never approved by insurers. Take note also that you cannot apply for life insurance for another person without that person’s consent.
Most likely you are able to secure life insurance coverage for your parents if you help them apply for a policy that they will own, where they name you as the beneficiary. But you can still pay the premiums even if your parents own the policy.
You’re thinking if it’s actually possible for you to buy a life insurance policy for your parents, and the answer is yes. Of course, you can! Purchasing a life insurance policy for your parents is the same as buying a policy for yourself—only with several key differences. It will not require you to buy life insurance for someone if you’re related by blood. All you need is what we call insurable interest.
This insurable interest is proof that you have the support of suffering some type of financial loss when your parents die. It’s a requirement that prevents people from taking advantage of policies that they take out on people they expect to die soon. It doesn’t matter if you’ll be in charge of your parents’ debt or paying for final expenses, family members commonly shouldn’t have an issue proving insurable interest.
After you’re done proving your insurable interest, you’ll need to identify a proper amount of coverage. Plenty of coverage could raise red flags with the insurance company, whereas too small could make you powerless to fulfil your new financial obligation. This is why you need to comprehend precisely how much insurable interest you would have if your parents were to pass away.
Steps to Buying a Life Insurance Policy For Your Parents
Getting a life insurance policy for your parents is just like shopping for coverage yourself. But you need to talk to the reliable insurance broker, identify the right provider and policy for your situation, here are several steps to consider:
Consent. Prior to looking into life insurance for your parents, you should first make sure that it’s okay with them. If your parents do not agree, you can’t move forward with the policy. This is to avoid policies being taken out on people without their knowledge.
Insurable Interest. After having their consent, you have to establish insurable interest to prove that you stand to experience financial loss when they die.
Amount. Identify how much coverage you’ll need depending on you and your parent’s financial situation. You may consider consulting with a financial adviser.
Type: There are three fundamental types of life insurance: Term, whole and universal. Make sure you have the protection you need and talk about the type of policy that’s best for your situation.
Beneficiary and Ownership: If you’re planning to get life insurance for your parents, possibilities are you’ll also be the owner and beneficiary of the policy. But this is not always the case. You may determine who’s in charge of the policy and listed as a beneficiary.
Payer: Usually, the owner of the policy is responsible for making payments, however, your situation may be different. Talk to your parents and your provider to know who’ll make payments on the policy.
Final Expense Insurance for Your Parents
Another type of life insurance policy that’s easier to buy on behalf of your parents—Final expense insurance. This is also called as burial insurance, it’s a sort of permanent life insurance that will last up till your parent dies, considering you keep paying the premiums.
However, you will still require your parent’s consent for applying in this policy. Although there are is no medical exam needed, your parent will have to answer some medical questions and the policy won’t be issued if they currently have a terminal issue.
In the US, final expense insurance monthly premiums can range from $50 to several hundred dollars, depending on age and location. These policies are available for death benefit amounts from $5000 to $25000—while some companies may provide a benefit of up to $50000.
Ivandrea Ollero is a daytime writer for Insurance Advisernet NZ, one of the largest and most trusted General Insurance businesses in New Zealand, providing leading insurance products, technology, and policy wordings. She is also a content crafter who researches and writes custom content about travel, fashion, finance, business, home improvements, health, and beauty, in order to provide helpful information and tips for her readers. Ivandrea graduated from St. Scholastica’s College, Manila, with a Bachelor’s Degree in Broadcast Journalism in 2016.