When purchasing life insurance, many people will typically only obtain policies on those with whom a loss would cause some type of financial hardship. This does not only pertain to life insurance on your spouse but also, life insurance for parents. Certainly, this is true for 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.
Why Purchase Life Insurance For Parents?
There are several 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 expenses.
Paying for Burial and 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.
Paying For Debts Left Behind
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, 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 life insurance 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 stressful time of their lives. Life insurance can remove that stress and allow not only you but also your family to have comfort that you would not have had otherwise.
In most cases, life insurance for your 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 varying terms, but the most common are 10, 20, and 30 years.
Steps Involved In Purchasing A Policy On A Parent
When you purchase life insurance for another individual (or individuals), there are a few things you will want to have prepared and ready to go before purchasing a policy.
It will be required that you first prove what is known as insurable interest. Which means 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, along with 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.
Amount of Coverage
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 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?
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 company, the insurance underwriters will review a number of qualification criteria. These typically include the applicants:
- Height and weight
- Health history
- Are they married
- Do they use tobacco products
- Do they consume alcohol
- Are they employed and what is their income
- Amount of foreign travel
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 a risk.
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.
What Will The Medical Exam Entail
This typically entails a medical professional meeting the applicant for life insurance coverage at their home and taking a urine and blood sample.
From these samples, the 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, meaning they are of average health and will pay the same amount 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 pay a higher premium for the 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.
No Medical Exam Option
If your parent is declined for life insurance coverage 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 policy have been able to get a no-exam insurance policy at 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.
The purpose of the medical exam is to provide the insurance company with an explanation of your overall health, which will reflect how much of a risk you are to insure. Without taking the medical exam, they are going to be taking a much great risk to give you life insurance coverage.
Another disadvantage to these policies is that you may be limited on how much coverage you can buy for your parents. Most insurance companies will only sell you around $250,000 without taking the medical exam, which may not be enough life insurance protection.
Not having enough coverage could be the worst mistake that you could make. There are a few companies that will sell you $500,000 or even $1 million, but those companies are rare and expensive.
Although no medical exam insurance plans are more expensive, there are a few benefits to these plans as well. One of the most notable is how quickly your parents can be approved for insurance coverage.
With a traditional insurance plan, you could wait up to a month to have your application approved, but with the no exam plan, you can get life insurance protection in just a few days. If you’re looking to get life insurance for your parents as quickly as possible, this plan would be the best option.
A no exam policy is an excellent option for your parents if they won’t be approved for a traditional plan, but there are a lot of companies that work with high-risk applicants and will approve applicants with various medical conditions. Though this type of policy should only be used as a last resort for insurance protection.
No Exam Life Insurance Companies for Parents
If you decide to buy a no exam policy, you’ll need to figure out which one is best. There are many companies which sell no exam policies. It’s becoming a popular choice for coverage, but not every policy is the same.
You shouldn’t just buy the first no exam plan you find. There are several factors you and your parents will need to weigh when picking a company and plan.
Most people look for the cheapest policy out there. In some cases, that’s okay, in others it’s a bad idea. What if the “cheap” company has awful customer service or they take months to pay out the policy?
Don’t buy a plan before you look at reviews of the company (luckily, we have several), the financial grades of the company, and see what other policyholders have to say about the carrier. This should give you a clear picture of what you’re getting into when you’re buying a policy.
Getting Affordable Life Insurance Coverage On Your Parents
When you’re looking to get a life insurance policy for your parents, there will be many different factors that the insurance company will review, we listed most of them above.
All of those will play a huge role in what your parent’s life insurance coverage will cost. There are a few ways that you can help secure better rates from the company on your parent’s life insurance.
A great way to encourage them to quit smoking or any other tobacco that they use. If they are listed as a smoker on the life insurance application, you’re going to pay a lot more in monthly premiums for the insurance coverage. Actually, smokers will pay double as much for life insurance compared to what a non-smoker will pay. Getting them to kick that bad habit could cut your life insurance rates in half.
Working with an independent insurance broker will help you know that you are going to get the best coverage possible for your needs. Unlike that of traditional insurance agents, an independent agent will work with numerous highly rated companies nationwide, which will help ensure great rates.
Don’t waste valuable time calling around to different companies to get life insurance for your parents, we can handle that for you. We know that looking for life insurance coverage is a difficult task, but it doesn’t have to be. We can help you compare the different kinds of plans and bring you the best insurance premiums on the market.
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 many 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 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 best to start by obtaining quotes from several top-rated insurance companies. That way, you can determine which policy will provide the most cost-effective coverage.
There are a lot of insurance companies who have made the application process as quick and easy as possible. In fact, there are no exam plans out there which can be completed in less than 30 minutes and you will be approved/declined within two days. Now that’s fast! They made it so quick and simple you have no reason not to purchase life insurance coverage for your parents.
By working with some of the best life insurers in the industry today and will provide you with the quote comparisons that you need. Simply fill in the quote form 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, please contact us at 888-229-7522 and we’ll be happy to help.