The thought of purchasing life insurance for your parents is not something people consider, however if they’re getting on in years it’s time to start thinking about their life insurance needs.
Many people don’t realize just how expensive end of life costs can be. Life insurance offers a simple way to provide money to cover any expenses that are incurred towards the end of your parents’ lives or as a result of their death.
Why Is Life Insurance Important For Older People?
We’re often acquire life insurance when we experience life changes such as getting married, buying a house, or having children as it’s an easy and affordable way to provide for your family financially if you were to pass away unexpectedly. So how does life insurance fit in to end of life planning for your elderly parents? As your parents’ age increases and their health decreases it’s important to start thinking about their financial situation.
End of life costs can come as an unexpected expense that can put severe strain on your family’s finances.You may find that you become responsible for paying medical expenses and other estate costs associated with the death of a parent in addition to paying for burial fees. Did you know that the average funeral in the US now costs over $7,000? Having a life insurance plan in place for your parents will help take care of their burial costs and any other final expenses. In addition, if your parents have any outstanding debts, a life insurance policy will help the estate pay debts upon their death.
Purchasing A Life Insurance Plan For Your Parents
There are regulations in place that restrict who can purchase life insurance for another person. These laws are designed to prevent unlawful activity. So are you legally allowed to buy a life insurance policy to cover your parents? The simple answer is yes! However, there are some requirements that you must meet. Before you can purchase life insurance for a parent, you will first be required to prove that you have what is considered “insurable interest”. Insurable interest shows that you, as their child, will suffer some sort of financial loss in the event of your parent’s death.
In many cases, it is not difficult for an adult child to demonstrate insurable interest when it comes to obtaining life insurance for their mother, father or other legal guardian. Once you have shown that you do have insurable interest, you will be able to purchase a policy and place yourself as the beneficiary.
Determining The Right Life Insurance Coverage Amount
Once you have established insurable interest, the next step is determining the amount of coverage that you may need. You will need to consider the amount of coverage that will be necessary to cover any debts, as well as pay any final expenses. Think through your parents’ coverage needs carefully to determine the right policy face amount to ensure that you don’t under or even over estimate their needs. If you need financial assistance with funeral and final expenses, you should consider the average cost of funerals in the US in between $7,000 and $12,000. This includes the funeral home, service, and burial expenses. If this is all you need coverage for an insurance policy of $12,000 or less may be sufficient. However, if your parents have a lot of medical expenses or a large amount of debt owed, you should consider a larger policy to meet your financial needs.
Choosing The Right Type Of Life Insurance Policy
Choosing the type of coverage that will best serve your individual needs and those of your parents may be confusing, especially if this is your first-time shopping for life insurance! However, a little prior preparation can help you choose the best type of plan for your needs. There are two main types of life insurance that can be used as life insurance for a parent, these are term life insurance or permanent life insurance.
Term life insurance provides a guaranteed level premium for a set period such as 10, 20, or 30 years. If you choose term life insurance, elderly parents will only be covered for the amount of time set forth in the insurance policy you purchased, which means that if they outlive the policy the insurer will not pay out a death benefit. If your parents are older, it may be difficult to find a term life plan to last beyond their life expectancy.
Permanent life insurance is life insurance coverage that lasts for the life of the policyholder if policy premiums are paid. Final expense coverage is a common form of permanent life insurance that is available to seniors who want to leave money to cover their final expenses. Although they may be more expensive than term life policies these plans provide a guaranteed pay out as if you purchase permanent insurance, the policy will last throughout the remainder of your parent’s lives.
Finding An Affordable Life Insurance Plan For Your Parents
When purchasing life insurance for parents it’s essential to compare quotes from multiple insurers as the costs of buying life insurance for your parents may differ between companies. Premiums are based on your parents’ health and age. If your parents are older and less healthy, the premiums may be higher. To compare quotes from many of the best providers you can use our online form to obtain free life insurance quotes that will help you find the best plan for your needs.
You can also talk to our insurance advisors at 1-800-963-6405 if you have any questions or would like help buying life insurance for your parents.