In most cases, you can purchase life insurance policies for your parents. The most popular types of policies for parents are term life insurance, whole life insurance, and second to die policies. Here is some of the information you’ll need to know if you are a child searching for your parent/s.
Is Buying Life Insurance on My Parents a Good Deal?
Prior to age 85, it seems life insurance can still be purchased for a relatively affordable premium. For example, you would pay $14,560 per year for an 83 year old mother in good health for a $250,000 policy guaranteed for life with North American Co for Life and Health.
If we assume she has a life expectany of 10 years, you will have paid $145,600 into the policy after 10 years. If she were to pass away at any point before that, it seems to be a great rate of return on your premium. You certainly wouldn’t be able to match that kind of return in any alternative investment.
If your parents are younger than 80 and in good health, life insurance is an incredible leveraging tool, and makes even more sense than in the example above.
Honestly, life insurance loses leveraging power after age 85 and is pretty expensive. See the quote form on the right for an instant quote.
Ownership of Policy: One of the first things I ask the child when he/she calls me is who would be the owner and payor of the policy. In some cases, children are simply calling on behalf of their parents who are not internet savvy, and are doing nothing more than helping their parents, who don’t know how to buy life insurance, with the quoting and application process, but that the parents will be paying for the policy.
In other cases, you have children who will be the owner of the policy, pay the premiums, and also be the beneficiary of the death proceeds. Usually this is okay as long as the child can prove an insurable interest. This is 100% legal, but will require approval by the insurance company.
An insurable interest means that the child would be somehow financially affected by the death of his or her parents. So if your parents have a big mortgage on their home, and you don’t want to inherit their debt, life insurance may be in order. Or if you are responsible for your parents funeral and burial arrangements, life insurance may be used for this.
How Much Life Insurance Can I Purchase on My Parents?
The trick is to apply for a reasonable amount of coverage to protect you from financial hardship. The idea is to be indemnified, or made whole… not to get rich off your parents’ death. So if your 81 year old mother is living with you, and lives off social security, and provides no financial benefit to your family, and has no debt, you would not, for example, be approved for a 1 million dollar life insurance policy.
In most cases, a $100,000 life insurance policy for parents is approved without hitting any barriers. Beyond this, financial justification will be required.
Requirements to Purchase Life Insurance on Your Parents
Your parents will first, need to be aware that the policy is being taken out on them. It’s impossible for them not to know, since they will need to sign the application as the “primary insured” or “primary applicant”. Most policies will also require a medical exam. It’s really not too complicated. You just complete an application, (sometimes the medical exam), and then wait for approval.
Types of Life Insurance for Parents:
Term is the most common type of insurance sold today, because it offers the lowest cost for level premiums during the duration of the term. You must consider your parents’ life expectancy, however, if you’re considering term. You don’t want to get a 10 year term if you actually need the coverage for as long as they live.
In the latter case, whole life insurance, or its little sister, universal life insurance (a lower cost policy offering coverage for life), may be more suitable for you. You can get quotes in our quote form on the right to age 100 or 121, which are guaranteed universal life insurance policies.
Another popular choice for parents is a second-to-die policy. As the name indicates, this policy only pays out one death benefit, upon death of the second parent. This type of insurance is popular in combination with estate planning and life insurance trusts, but not necessarily.
Please note if your mother or father have health issues, please see our post on impaired risk life insurance, for details on how we are able to provide affordable life insurance to our clients with history of stroke, heart disease, cancer, diabetes, etc.
For the best term life insurance prices on your parents, or any other type of life insurance, it’s best to speak with a knowledgeable professional, who can discuss your options and pricing with you. You may get a quote using our form on the right or by calling us at 877-996-9383.
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Purchase a life insurance for my mother at age 82.
We need a quote!
Thanks!
Hello Truong,
One of our representatives will be calling you. Thank you.