Although nobody wants to think about the loss of a parent, buying insurance for your parents can make sure you don’t get stuck with a funeral expenses bill you might not be able to afford.
Thinking about the inevitable is tough, but securing life insurance for a parent is a smart financial decision. Buying life insurance can cost a fraction of what a funeral bill will be. There are a few different plans that allow you to secure the coverage you need to protect yourself.
In this article, we will teach you about the types of plans available for parents, the underwriting guidelines, how to get the lowest cost, and a few other tips.
Yes, you can buy life insurance for your parents. But you will have to have three things.
Insurable interest – (will have to prove their death will have a monetary impact on you to prove insurable interest)
Consent – (means they will have to know about the policy and sign the application as either the insured or owner)
Participation – (there is a chance of a phone interview needed depending on the carrier, so your parents will have to participate in the application process)
If you have those three things then you should continue reading to find out more about your life insurance options and the best insurance carriers.
What is the best life insurance for my parents?
Typically when looking for a policy for your parents, you are just looking for enough coverage to cover funeral expenses which means whole life insurance or a permanent policy makes sense. The problem with buying term life insurance is they may outlive the coverage.
When buying life insurance which type of life insurance policy is best will be determined by your parent’s health if they are in good/moderate health then a Guaranteed Universal Life policy will be the cheapest and the best life insurance plan.
If they have a significant health issue and can not medically qualify, then the best policy type will be a Guaranteed Issue policy.
Don’t worry when you work with an Insurance Geek they will help understand these types of insurance policies and find you the lowest cost and protect your loved ones. If you need more coverage than just a burial policy then see this article on life insurance for seniors here.
Types of Life Insurance for Parents
There are several types of whole life plans available that all have different underwriting requirements. You have traditional fully underwritten whole life plans that have no limits on the amount of coverage you can buy and you have more simplified products such as final expense and Guaranteed issue plans that offer lower limits: typically up to $25,000 in life coverage.
This type of policy requires minimal underwriting. A Final Expense policy is cheaper than a Guaranteed Issue policy, but the application does ask several medical questions. Your parents can have some moderate medical history and still qualify for this insurance. See the medical questions below.
Final Expense policies are much easier to qualify for than traditional whole life.
A Guaranteed Issue whole life insurance policy requires no underwriting and has no medical exam or no health questions on the application. If you have any health issues that could medically disqualify you from a fully underwritten policy, then Guaranteed Issue whole life is for the best life insurance you.
These insurance policies have a graded death benefit, which means the policy comes with a two-year waiting period before the full death benefit will be paid to any family member. There are also only a few life insurance companies that offer this plan.
Universal life insurance is also an option if your parents are in good health. Buying this type of life insurance is the cheapest way to get permanent coverage. It’s a mix of a term policy and whole life policy. It is permanent coverage like a whole life but doesn’t build cash value just like a term policy.
These policies are called guaranteed universal life policies and more life insurance companies are removing these from their product offerings each day.
Term life insurance protection might still be possible depending on the term length and the age of your parent. We have several insurance companies that will offer a 10-year term policy for parents up to age 80. All term life policies at that age will require a medical exam and full underwriting too.
The problem with buying term policies is your parent can easily outlive the coverage and you risk paying for life insurance coverage that you never get to use and they build no cash value. A spouse, children, family members and loved one can rely on this coverage to pay for left behind credit cards, medical bills, and final expenses. Having a permanent policy can offer much more peace of mind for money they may need.
How is the cost determined
Several things will determine the price of a life insurance policy on your parents. The cost will be different from one individual to the next. Here are some of the factors that will make up the cost.
When you buy a policy on your parents, the policy structure can be set up in several ways. You know who the insured will be (your parent), but who will be the payor, owner, and beneficiary of the policy? And why are these important?
The Payor – (this is who will pay for the policy. It can either be you or your parent)
The Owner – (the owner can be you or your parent. The owner will have the right to make changes to the policy and even cancel it at any time.)
The Beneficiary – (you can be the beneficiary of the policy. Whoever the beneficiary is can spend the death benefit however they want)
Underwriting for Parents
Insurability for a life insurance policy will depend on answers to medical and other application questions and underwriting review. No blood test or medical exam will be needed for some policy types.
Getting life insurance quotes for your parents is easy. We have built an exclusive quote widget to help you get quick life insurance quotes.
Once you have run quotes and found a cost you like, you can then apply online through our online application process.
Your application request will come directly to your new insurance agent (Geek), and they will assist with submitting the application to the carrier and signing the application. They will verify and check to make sure there are no better offers available and you are with the best carrier before you apply.
Getting life insurance on your parents is crucial if you don’t want to get stuck with the cost of their final expenses.
A lot of time, parents don’t plan for this event or even want to talk about it, and, hey, I can not blame them. Death is a scary subject and sometimes a difficult one to approach. So if you follow the steps above, you can quickly and easily purchase life insurance that will protect you in the future.
If you have questions, don’t hesitate to contact us. An Insurance Geek can help you select the amount of coverage you need, type of life insurance policy, and make sure you do not get stuck with your parents end of life expenses.