There are some crucial things you need to know before you buy life insurance for your father, but this article will help you prepare so you can make an informed decision.
Is Life Insurance a Worthwhile Investment for my Father?
In most instances, the answer would be yes. Life insurance could be considered a very good investment especially if your father is under the under the age of 85. After age 85, the premiums become very expensive, and the amount of available coverage can be very limited with many life insurance companies.
Who Will Own the Life Insurance Policy?
This depends on who is paying for the policy. If your father is paying for the policy then they will own the policy. If you are paying for the premiums then you will be the owner of the policy.
The other thing to know is that if you are paying for the policy, you will not only be the owner of the policy, but will also likely be listed as the beneficiary.
However, there is one small catch if you are the owner, paying for the policy, and are the beneficiary. In order to be approved by the insurance company you may have to prove that you have an insurance interest in order to qualify.
An insurable interest simply means that if your father were to suddenly die, then you would end up financially burdened. This could mean anything such as outstanding debts which will need to be cleared up, such as an outstanding mortgage or the funeral and death expenses for example.
How Much Life Insurance Can I Buy for My Father?
The general rule of thumb which I suggest is that you buy only what you think your father needs. The idea is remove any financial burden rather than thinking as the insurance policy as something to make a profit.
In most instances, the majority of life insurance companies will allow you to purchase up to a $100,000 policy without receiving any obstruction from the company that is reviewing your application.
If you are looking to buy more than this amount, the insurance company will most likely you to justify the reasons why you want to purchase more.
If your father doesn’t owe any money and is living off a small pension combined with social security, then you will not likely be approved for a $500,000 policy for example, unless you can prove the need for such an amount.
Does your Father Need to Know if you Buy an Insurance Policy?
The answer to this is yes. Since the policy is for him, then your father will have to be the signatory on the policy because they are designated as the ‘primary insured’. They will obviously know you are buying a policy for them.
Are there Any Restrictions on Buying Insurance for my Father?
The only restriction that you will likely encounter is that your father will have to take a medical exam. The requirements for medical exams vary from company to company. The medical examination will not be overly intrusive and usually requires only a few simple tests and can be done fairly quickly.
What Kinds of Life Insurance can I Buy for My Father?
You have four choices to consider when deciding on what type of life insurance policy to buy for your father.
The first is called ‘Term Insurance’, and is the most affordable form of life insurance. It is called term because you buy the insurance for a period of years such as 10 or 20 years for example. The basic approach is to buy a policy that might best match your father’s life expectancy. This policy pays death benefits only.
Your second life insurance option is called ‘Permanent Insurance’. Your two main choices for permanent insurance are ‘Whole Life’ and ‘Universal Life’. Although both policies cover your father for life, universal is a cheaper product to buy. These policies not only pay death benefits but also have a cash value accumulation. Either of these policies is ideal if you need to provide a policy for your father for their entire life.
The third life insurance option is called a ‘Second to Die’ policy. If your mother is still alive then this might be the route to take because the policy is only paid out when the second parent has passed away. Also, this policy is often used if you’re planning for an estate or a life insurance trust.
The final option is very ideal if your father has a serious health ailment such as cancer, or heart disease. This policy is known as ‘Impaired Risk Insurance’, and is an area we specialize.
You can use our quote form on the right site of this page to get a quote to see how much a policy might cost.
If you would like to learn more buying life insurance for your father than you may also want to read Can I Purchase Life Insurance on My Parents.
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.