Learn what’s required, how final expense policies work, the cost, and how to get no waiting period coverage.
Buying life insurance for a parent is allowed by most final expense insurance companies. The requirements are generally:
- They agree to the policy being issued.
- They answer the health questions unless you’re applying for a guaranteed acceptance policy (no health questions).
- They sign the application (there are various ways to sign).
Those requirements cannot be waived under any circumstances.
If your mom or dad is unwilling to participate in the application process, there is no way to insure them. Check into a pre-paid burial directly with a funeral home if they won’t let you buy life insurance coverage for them.
Buying life insurance for someone else generally requires an “insurable interest.” Insurable interest is when you, the beneficiary, would endure a financial setback due to the insured’s death (your parents). Fortunately, your parent’s final expenses will satisfy the insurable interest requirement.
So when buying final expense insurance for your parents, no insurance company will ask you why you want the policy or require you to provide documents proving you have insurable interest.
Ideally, you should be the owner, payor, and beneficiary (unless you want someone else to be). That way, you’re the only one who can inquire about the policy or make changes to it.
With a life insurance policy, there are generally four parties:
- Insured (your parents)
- Owner (the person in control of the policy and owns any cash value that has accumulated)
- Beneficiaries (to whom the death benefit is paid to upon the passing of the insured)
- Payor (whomever pays the premiums)
Ownership establishment can be done in the application or transferred after the policy has been issued.
Be very wary of buying funeral insurance online because online applications are not meant to be submitted by anyone other than the insured.
If you use those online forms from companies such as AAA or Colonial Penn, the insured (your parent) is automatically the owner. You’d be paying for a policy and have no control over it. To make any inquires or changes to the policy (even to cancel it), the insurance company would only speak to your parent, and only they could execute changes.
Burial insurance for seniors is a small whole life insurance policy meant to pay for all funeral expenses. It provides immediate peace of mind knowing that family members won’t be stuck with the financial burden of unpaid end-of-life costs. Upon your parent’s death, the insurance company will give a tax-free check directly to you or your loved ones so they can pay for their final expenses.
Technically, the payout money can be used for anything, such as funeral services, medical bills, credit card or other outstanding debts, or anything else. Any money left over stays with the beneficiary(s).
The monthly premiums are affordable, medical exams aren’t required, and the underwriting is very lenient so that people with health issues still qualify. Most companies will offer coverage from $2,000-$50,000 and are available from ages 18-90.
Some burial policies have health questions, and some do not. Both options have their pros and cons, so it’s essential to understand the differences.
First, plans with health questions generally cost less and have no waiting period (if you’re approved). On the other hand, plans without health questions (aka guaranteed acceptance life insurance) will not deny you because of pre-existing health conditions.
The guaranteed approval provision does come with drawbacks. They are more expensive since the insurer takes on much risk knowing nothing about your health. Also, they have a two-year waiting period. The insurer will only refund your premiums if you die during the waiting period for any non-accidental death.
The payments on a burial insurance policy will never increase, the death benefit won’t decrease, and it will never terminate due to age. Additionally, they build cash value that the policy owner can withdraw and use as they see fit.
It’s important to remember that you will also hear “burial insurance,” commonly referred to as “final expense insurance” or “funeral insurance.” All three of these terms have the same meaning.
The cost of final expense insurance for parents is usually between $50-$100 monthly for a $10,000 death benefit.
Remember, life insurance rates for your parents are based on exact age, gender, health, tobacco usage, state of residence, and the amount of coverage you want.
Below are some of the best companies that offer life insurance for seniors over 80. Please note that these providers may only be available in some states. For example, these companies (except Transamerica) don’t offer coverage in New York.
|Insurance Company||Coverage Options Above 75||Max Age For New Applicants||Policy Type||When Policy
Can Pay Out
|$2,000-$40,000||85||Whole Life Insurance||No waiting period|
|$1,000-$30,000*||85||Whole Life Insurance||No waiting period|
|$2,000-$25,000||89||Whole Life Insurance||No waiting period|
|$2,500-$25,000||89||Whole Life Insurance||No waiting period|
|$2,500-$15,000*||90||Whole Life Insurance||No waiting period|
|$2,000-$20,000*||90||Whole Life Insurance||Refund of premiums in first 12 months, 50% payout in 2nd year, then full benefits after 2 years|
|*Maximum coverage varies by age|
Whether you want life insurance for parents or grandparents, it’s vitally important to compare various policies side by side to find the best burial insurance plan. That’s because each company’s final expense policies vary significantly in price, underwriting, and waiting periods.
The best thing you can do is to work with an independent agency like Choice Mutual. Independent agencies represent multiple insurance providers rather than just one. An agency’s job is to analyze each carrier to find the best life insurance option without granting favor to one company or another.
In contrast, captive insurance companies do not allow their insurance agents to represent other providers. For example, State Farm is a captive life insurance company. Their agents can only offer State Farm. If you don’t like State Farm’s offer, the agent cannot recommend another insurer that might give you a better deal.
Remember, when you buy through a broker like Choice Mutual, there is never a cost, fee, or upcharge to the insurance. An independent agency will answer all your questions and find you the best, least expensive policy possible.
If you’re trying to purchase burial insurance for a parent, call us at 1-800-644-2926.
We partner with over 15 different insurance companies. We’ll find you the best price possible and hold your hand throughout the process.
The cost of a funeral varies greatly depending on your preferences. According to the NFDA, the average funeral (with a burial, viewing, and vault) costs about $9,420. Cremation is less expensive, but not a significant amount. The average cost of cremation is $6,970.
But you can save considerable money if you opt for direct burial or direct cremation. A direct funeral has no memorial services of any kind. The average direct burial costs $2,597, and the average direct cremation costs $2,183.
Shopping around saves you a lot of money on burial expenses. For example, call multiple cemeteries to see which has the least expensive burial plot. Also, you can buy caskets online from companies like Costco. Just know that you don’t have to accept what the funeral home initially offers you.
You can buy burial insurance for a parent so long as your mother or father consents to the policy by signing the application. In addition, they will need to answer the health questions if there are any. Having POA will not allow you to do it for them.
Final expense whole life insurance is the best type of policy to buy if you need coverage to pay for your parent’s funeral costs. It’s permanent life insurance that lasts forever and has a fixed monthly price. Buying a term life insurance policy is not advisable because they generally terminate around age 80. While term insurance products are cheaper, most seniors outlive them, leaving you with no insurance to cover their burial expenses. A universal life insurance plan is also one to consider, given that it is a type of permanent life insurance. The primary difference between whole and universal life is that a UL policy has payment flexibility and costs slightly less. However, universal life, like term insurance, is risky since the payments often increase after age 75, making it unaffordable and thus losing coverage.
$50-$100 per month is the typical cost of a $10,000 burial policy. However, if your parents are very old or in poor health, their price may be higher. Life insurance costs are always a function of age, health, gender, tobacco habits, state of residence, type of policy, and how much coverage you buy.
If you want to purchase life insurance to pay for your mom or dad’s funeral bills, first determine what type of funeral they would prefer. Then estimate the cost of their desired funeral to calculate how much coverage you’ll need. The NFDA’s most recent 2021 report showed that the average burial with a vault, viewing, and service costs $9,420. Alternatively, a cremation service with viewing costs $6,970. You can significantly lower these costs by opting for direct burial or direct cremation. A direct funeral is when there are no services of any kind. The funeral provider immediately buries or cremates the body with no viewing or processions of any kind. The median cost of a direct burial is $2,597, and only $2,183 for a direct cremation.
Buying any life insurance for an adult without their involvement and consent is not legally possible. Taking out a policy on them without them knowing would be insurance fraud. In all circumstances, the insurance companies require the insured (your parents) to sign the application and agree that the policy will be issued. That’s true even if you have POA over them.