The Detroit Post
Sunday, 17 October, 2021

My Life Insurance Parents

Ellen Grant
• Sunday, 17 October, 2021
• 7 min read

While both may be fairly easy to acquire, depending on your personal situation, it may be easier to have your parent apply for life insurance instead. Of course, that doesn't mean you can't do the majority of the heavy lifting, like comparing rates or even applying for your parent, and having them finalize the application.

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Our professional advice: Final expense insurance is our recommended option for individuals ages 65-85. Our professional advice: If you had some serious health conditions, a guaranteed issue life insurance policy may be your only option.

Basically, anyone can qualify for an accidental death life insurance policy, regardless of their health history. Having the conversation about life insurance for your parents opens a dialogue about other important considerations related to seniors such as long-term care, wills, executors, and overall finances.

Life insurance is an integral part of life planning and the life insurance conversation helps families take an honest look at their true needs and the detailed numbers on everything from retirement savings to health care to final expenses. Whether buying life insurance for your parents or for anyone else, you’ll need the consent of the insured.

Alternatively, you can buy a life insurance policy for your parents, but only if you can prove insurable interest and only with their consent. In this case, you are the owner of the policy and responsible to make premium payments.

You wouldn’t suffer a financial loss if your neighbor’s house was damaged. It isn often’t difficult to prove you have an insurable interest if your parents pass but the amount of documentation needed will increase as the requested policy coverage amount increases.

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A smaller policy generally considers final expenses, such as funerals and burial costs, which can often exceed $10,000. Policies with higher coverage amounts may be considering sizable outstanding debt as well, such as a mortgage on a home or other debt which could affect an inheritance or possibly turn an inheritance into a sudden burden.

Rates listed below are for a 64-year-old man in California in good health and who never smoked. No Exam Term Life Instant IssueFinal ExpenseGuaranteed IssueLowest Price CompanyAmount Of Coverage$$50,00050,000$$50,00040,000Policy Type10 Year Term Reinsurance 10 Year Term Reinsurance Level Whole Life Guaranteed Issue Whole Life Medical Exam? No Medical ExamNo Medical ExamNo Medical Example Long For Approval? Up To 2 weeksUsually Same Layup To 2 weeksUsually Same Premium Quoted$63.91 per month$78.17 per month$275.74 per month$342.92 per month.

Bear in mind that final expenses may include some medical expenses and that funeral and burial costs have a tendency to outgrow budgets and cost expectations. Among common medical costs are hospice and hospital bills that were not covered by Medicare.

It’s wise to plan for at least some leftover bills when setting goals for a life insurance policy for your parents. For instance, if your parents own a house which they intend to leave to you but the home still has a sizable mortgage, a life insurance policy with a higher death benefit may help to pay for final expenses as well as paying some or all of the remaining mortgage balance on your parent’s home.

Once you’ve established your goals for the life insurance policy for your parents, it’s time to do the math and start estimating how much you will need the policy to provide as a death benefit. If a higher coverage amount doesn’t fit your budget, a burial life insurance policy with a death benefit as low as $10,000 can be purchased.

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If your goal for the life insurance policy is to protect an inheritance, maybe a home that your parents are leaving to you, you’ll need to look at larger death benefit options, which may reduce the types of policies that will meet your needs. It becomes important to look a big picture including the amount of money your parents have in savings, other income, and outstanding debt.

If your parents have significant savings and only a short amount of time remaining on their mortgage, you may not need as much for a death benefit. However, if your parents just did a cash-out refinance on their home and have no meaningful savings, you might want to look closely at those numbers.

Most often, term life insurance is purchased to cover a large debt, such as a mortgage or another financial obligation. This type of policy is often purchased to cover a financial responsibility that has an end date, like a mortgage or providing for children.

Because a term life policy is only in force for a specific amount of time it is less expensive than some other life insurance types. The available term options, meaning how long the policy will be in force with guaranteed premiums, will often be for a shorter amount of time if the insured person is older.

If one of your primary reasons to buy life insurance for your parents is to cover their mortgage and the time remaining on their mortgage is within the available term options, ask an agent if a term policy is a good fit for your needs. Where a term policy has a fixed time period for guaranteed premiums, a standard whole life insurance policy offers fixed premiums for the entire life of the insured.

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Many companies offer policies for customers up to 80 years of age, and sometimes even slightly older. Even if a medical exam is not required, applicants will need to answer some questions about their health, and insurance companies may check the information available from the Medical Insurance Bureau (MIB).

The age of your parents will be a large factor in determining rates. For many policy types, insurers will assign a rating class which groups people by health status, family history, and other factors.

A final expense life insurance policy simplifies the process of the application and may not require a medical exam. The amount of the death benefit will also drive rates, but not usually on a linear basis.

Buying life insurance for your parents (or anyone else) requires their consent and evidence of insurable interest equal to the amount of the death benefit. Choosing the right type of life insurance policy for your parents and choosing a death benefit amount that will meet your needs requires taking an honest look at the goals of the policy.

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. Today, many seniors have mortgage balances on their homes, auto loans, and other personal debt.

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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. 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.

Which means you will endure some type of 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. In addition, if there are any ongoing income needs to be paid using the insurance policy proceeds, these should also be factored in.

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.

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This typically entails a medical professional meeting the applicant for life insurance coverage at their home and taking a urine and blood sample. 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. 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 your parent is declined for life insurance coverage then you may need to consider a no medical exam policy. Most insurance companies will only sell you around $250,000 without taking the medical exam, which may not be enough life insurance protection.

When you’re looking to get a life insurance policy for your parents, there will be many factors that the insurance company will review, we listed them above. 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.

Don’t waste valuable time calling around to different companies to get life insurance for your parents, we can handle that for you. 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.

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There are a lot of insurance companies who have made the application process as quick and easy as possible. 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. 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.

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