Wallace Group - Insurance Blog

How To Buy Life Insurance For Your Parents

It is possible to buy life insurance for your parents, but there are some challenges that must be noted. First and foremost, the application must be signed by the parent or parents for whom you want to buy life insurance unless you have documentation saying that your parents are unable to sign the application. This situation will be reviewed on a case-by-case-basis. Next, state laws will require that you demonstrate insurable interest, which essentially means that you have a financial interest in your parent’s survival, meaning that you'd suffer a financial loss if that person were to die. This can be established if you are the one who is going to pay for your parent’s funeral. Aside from that, you can buy life insurance for your parents and be the beneficiary of the policy, provided that your parents are eligible based on their health.

Why Buy Life Insurance for Your Father or Mother?

There are several reasons why adult children choose to buy life insurance for their mothers and fathers, and one of the most common is to cover the costs associated with a person passing, such as the burial or cremation, funeral expenses, casket, headstone, estate taxes, and other end of life expenses. However, another common reason you might want to buy life insurance for a parent is in the case of outstanding parental debts, because the insurance money can be used to pay off a mortgage, medical bills, car loans, credit card bills, and other debts.

How to Buy the Right Life Insurance for Your Parents

There are many different types of life insurance policies that are available for adult children to buy for their parents, and it all comes down to your needs and situation. Below are three of the most common types of life insurance policies for parents:

Term-life insurance is a more affordable but temporary policy that expires at the end of the term (usually 10 to 30 years), and your parent is only covered while the policy is active. Typically requires a medical examination.

Permanent or whole-life insurance has more expensive premiums, but the policy doesn’t expire at the end of a term. These policies do not typically require a medical exam and accept a great deal of pre-existing conditions depending on their situation.

Guaranteed life insurance is ideal for elderly parents or parents with severe pre-existing medical conditions. No medical exam is required.

How to Buy Life Insurance for Your Parents: Information You'll Need for the Application

The application process to buy life insurance for your father or mother will be similar to other insurance types, and there's a fair amount of information you'll need to provide. Some of the most common questions on the application will involve health and medication history, lifestyle questions, and more.

Buying life insurance for your parents can be a tough issue to grapple with because nobody likes thinking about these nitty-gritty life details. However, buying life insurance for your parents is a great way to ensure that all final expenses will be covered, that you won’t be saddled with debt when your parents pass, or that you won’t otherwise suffer any financial hardships if you rely on your parent for certain things or might have to cover other expenses on their behalf. The most important thing to remember is that you must get written consent from your parents first, but otherwise, it’s common for adult children to purchase and be the beneficiary of life insurance policies for their parents. Give us a call today and we will walk through the entire process with you.

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