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Can I Get Life Insurance On My Parents?

When purchasing life insurance, people will typically obtain policies on those with whom a loss would cause some type of financial hardship. Certainly, this is the case with many families. Even when adult children no longer depend upon their parents for financial support, there are still many reasons to have life insurance coverage on the lives of a parent or parents.affordable life insurance for parents

When purchasing life insurance, people will typically obtain policies on those with whom a loss would cause some type of financial hardship. One of the most common questions people have is if they can purchase a life insurance policy on one or both of their parents.

Yes, you can have a life insurance policy on your parents. Certainly, this is the case with many families. Even when adult children no longer depend upon their parents for financial support, there are still many reasons to have life insurance coverage on the lives of a parent or parents.

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Why Purchase Life Insurance on Your Parents?

There are a number of reasons to consider purchasing life insurance coverage on your parents – even if you no longer rely on them for your financial support. One of the biggest reasons is to help in paying for their burial and other final expenses.

Today, the average cost of a funeral can be in excess of $10,000 when factoring in the price of a headstone, a burial plot, and the actual funeral service. On top of final and funeral expenses is the likelihood that a parent may also have end-of-life hospice and medical costs as well that may not be covered by Medicare or other insurance. All of these costs can add up. Hospital bills are one of the leading causes of bankruptcies.

In addition, there may also be unpaid loans or other debts that a parent could leave behind. Today, many seniors have mortgage balances on their homes, as well as auto loans and other personal debt. The proceeds from a mortgage life insurance or standard policy could help to pay this off quickly and make sure that your parents assets are actually left to their heirs.

Having a life insurance policy on your parents will help offset the costs of their passing and any expenses they will leave behind. Many children are left with thousands of dollars of debt from their parents that adds more stress to an already stress time of their lives. Life insurance can remove that stress and allow you and your family to have peace of mind that you would not have otherwise.

In most cases, a life insurance policy for you parents will be quite affordable. The earlier in your parent’s life that you purchase the policy, the cheaper the monthly payments are going to be. The monthly payments will be directly impacted by their age, family history, occupation (if they still work), and current health. The amount of the policy and the term length will also have a huge effect on how much you pay every month. Life insurance policies come in vary terms, but the most common are 10, 20, and 30 years.

Steps Involved in Purchasing a Policy

When you purchase life insurance for another individual (or individuals), it will be required that you first prove what is known as insurable interest. This means that you will endure some type of a financial loss in the event of the insured’s passing.

In this case, it is possible that you would be affected financially due to the payment of final expenses, as well as the possibility of having to pay any other outstanding medical bills or debt obligations that a parent or parents have left. Here, once your insurable interest has been established, you will be able to be named as the beneficiary on your parents’ life insurance policy.

Prior to a policy purchase, you will also need to decide on the amount of coverage that will be obtained in order to best serve your financial needs. The face amount – or amount of the policy’s death benefit – can be established by adding up the estimated amount of final expenses, along with any other debt obligations that will need to be paid.

In addition, if there are any ongoing income needs to be paid using the life insurance policy proceeds, these should also be factored in. In many cases, individuals will also want to use their life insurance proceeds for the payment of estate taxes. Having insurance funds available to pay estate tax can eliminate the need to liquidate other assets for this liability.

Will Your Parents Qualify for Coverage?

When you purchase life insurance for another individual (or individuals), it will be required that you first prove what is known as insurable interest. This means that you will endure some type of a financial loss in the event of the insured’s passing.

In this case, it is possible that you would be affected financially due to the payment of final expenses, as well as the possibility of having to pay any other outstanding medical bills or debt obligations that a parent or parents have left. For your parent’s, showing insurable interest is as easy as showing proof that they are your parent or parents. Here, once your insurable interest has been established, you will be able to be named as the beneficiary on your parents’ life insurance policy.

Prior to a policy purchase, you will also need to decide on the amount of coverage that will be obtained in order to best serve your financial needs. The face amount – or amount of the policy’s death benefit – can be established by adding up the estimated amount of final expenses, along with any other debt obligations that will need to be paid.

Before you purchase a life insurance policy on your parents, you will need to decide exactly how large of policy is appropriate. The best way to do this is to talk to your parents about funeral costs, any outstanding debts, and any medical bills that they could accumulate. While it may not be any easy conversation to have, it is essential in finding the right policy.

In addition, if there are any ongoing income needs to be paid using the life insurance policy proceeds, these should also be factored in. In many cases, individuals will also want to use their life insurance proceeds for the payment of estate taxes. Having insurance funds available to pay estate tax can eliminate the need to liquidate other assets for this liability.

Certainly, one of the biggest factors in purchasing life insurance for your parents is ensuring that they will qualify for coverage. Upon submitting an application to the life insurance company, the insurance underwriters will review a number of qualification criteria. These typically include the applicant’s:

  • Age
  • Gender
  • Height and weight
  • Health history
  • Marital status
  • Smoking status / tobacco usage
  • Alcohol usage
  • Occupation and income
  • Amount of foreign travel
  • Hobbies

The underwriters will also consider the amount of any other life insurance coverage that is already in force. This is because applicants who have more life insurance than is actually needed are considered to be poor risks to the insurance company.

In addition to the information on the application for coverage, it is likely that the underwriters will also require your parent or parents to take a medical examination. This typically entails a medical professional meeting an applicant for life insurance coverage at their home and taking a blood and urine sample.

From these samples, the life insurance underwriters are able to review more closely for certain types of health conditions that could deem the applicant as more of a risk to the insurer – or possibly even as uninsurable.

Once all of the information has been reviewed, the underwriters will make a determination as to whether or not your parent or parents qualify for coverage. If they do qualify, they can receive one of several different rating categories. They may qualify as a Standard insured. This means that they qualify as having average health, and will pay the same amount of premium as other insureds in the Standard policy category.

If, however, the underwriters determine that your parent or parents may pose a higher risk to the insurance company, they may be considered as a Substandard risk. This means that, although they qualify for coverage, they will be required to pay a higher amount of premium for their life insurance policy due to the additional amount of risk. This additional risk could be for some different reasons, such as current health, tobacco usage, or family history.

If your parent is rejected for whatever reason, do not worry; there are still plenty of options available. In many cases, this will push you toward a different type of life insurance so that you can obtain a minimum amount of coverage for a much lower cost.

If you are outright rejected then you may need to consider a no medical exam policy.  These policies only have a health questionnaire and the underwriting is much more lenient.  Many of our clients who have been rejected for a standard life insurance policy have been able to get a no exam life insurance policy for a reasonable rate. While no medical exam policies work great for many families, you should expect to pay more for these policies than a traditional policy that requires a medical exam.

Taking the Next Step To Purchasing Coverage

Having life insurance is critical for every family. Many people tend to put it off until it’s too late. Don’t become one of the thousands of families that end up stuck with debt after one of your parents pass. No family should have financial worry while dealing with the loss of a loved one.

Purchasing a life insurance policy on your parents does not have to be difficult or time-consuming. When you’re ready to take the next step towards purchasing life insurance coverage for your parents, it is a good idea to obtain quotes from several top rated insurance companies. That way, you can determine which policy will provide the most cost effective coverage. We can even help you find FEGLI if this is something you are looking for.

We work with many of the best life insurers in the industry today and can help you with getting the quote comparisons that you need. Simply fill in the form on this page to begin the process. Using this form will save you the trouble and time of having to call numerous life insurance companies and receive quotes from each of them. If you have any additional questions regarding life insurance quotes or coverage, feel free to contact us toll-free at 888-229-7522 and we’ll be happy to help.

 

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