Yes, you can buy life insurance for your parents to cover their final expenses or other financial obligations.
Learn the requirements, how much it might cost, and some tips for finding the best policy.
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How To Buy Life Insurance For Your Parents
Children are allowed to buy life insurance for a parent in certain circumstances.
However, even though you’re paying for the coverage, they must consent to the policy by signing the application.
If your parents are unwilling to participate in the process, there is no way for you to buy life insurance for them.
Check into a pre-paid funeral if that’s your situation.
To buy life insurance for your mom or dad, you must have “insurable interest.”
Insurable interest is when you would suffer a financial burden due to your parent’s death.
The most common financial responsibilities that satisfy the insurable interest requirement usually include the following:
- Funeral bills (no proof required)
- Final medical bills
- Expenses to care for a surviving parent
- Financial debts that you cosigned as a responsible party for the debt
- Any cost that you would assume after the death of your parent
An insurance company will not ask questions or impose any requirements if you only want insurance to cover their cremation costs or burial expenses.
If you want life insurance for a parent for something other than their final expenses, check with a life insurance company first.
They can advise on whether you can insure your mother or father and the requirements.
5 Tips When Buying A Life Insurance Policy For Parents
As you start your journey towards buying life insurance for a parent, consider these five tips.
These pointers will save you time and money and ensure you find the best policy to meet your needs.
- Choose the correct type of policy: There are many different types of life insurance policies (whole life, term life, universal life), and they all work differently. Choose the right kind that is best suited to accomplish your goal.
- Start by obtaining their consent: Check with your mom and dad first to ensure they’re willing to participate in the process and agree to the coverage. If they aren’t, there is no way to insure them. Buying life insurance for a child is the only time you can legally purchase coverage for another person without their involvement.
- Gather information about their health: Knowing their past and current health conditions will allow an insurance agent to give you accurate life insurance quotes and policy options.
- Use an independent agent: Independent agents compare multiple insurance providers on your behalf to ensure you get the best deal possible. Captive life insurance companies (such as State Farm) can only offer you one company.
- Be open to companies you’ve never heard of: In 2020, there were 747 life insurance companies in the USA. Less than 1% advertise nationally, so they’re a household name. It’s unwise to exclude 99% of the market because their company names are unfamiliar.
What Is The Best Life Insurance For A Parent?
The best life insurance policy for your mom or dad depends on their age, health, and why you need the death benefit.
Remember, there are many life insurance products, and they all function differently.
Choosing the correct type of policy that will best satisfy your needs is critical.
That said, below are the most common reasons people want to insure a parent and which type of policy you should buy, given your objective.
- Funeral costs: A funeral insurance for parents policy would be ideal if you only need to cover your parent’s final expenses. Burial insurance, also known as final expense insurance or funeral insurance, is a small whole life insurance policy specifically meant to pay for end-of-life costs.
- Final medical bills or debts: Buy final expense insurance if you need insurance to pay off their final medical expenses or credit cards.
- Estate taxes: Whole life or universal life insurance (both are permanent life insurance that build cash value) would be ideal to pay off any death taxes incurred by your parent’s estate.
- Mortgage: A term life insurance policy would be ideal if you need to cover an existing mortgage balance.
- Auto loans: A term life policy would be the best to cover any remaining car notes. At most, you would need a 10-year term insurance plan.
- Expenses for caring for a surviving parent: A whole life would be ideal if you need more than $100,000 in coverage for long-term care or other health insurance expenses. If you need less than $100K, then a final expense policy would work too.
Remember, no one life insurance company is the best option for everyone. That’s because everyone has unique circumstances and needs.
For example, Mutual of Omaha’s burial insurance is generally the best final expense policy. But for some people, they aren’t the best option due to their health issues.
It’s best to compare offers from multiple life insurance companies to find which plan is best for your parents.
How Much Does A Life A Life Insurance Policy For Parents Cost?
On average, life insurance for a parent will cost $50-$250 monthly for $10,000-$50,000 in coverage.
Life insurance rates depend on age, health, coverage amount, and the type of policy you buy.
That said, most people buy their parents’ life insurance to cover funeral expenses. The table below has some sample final expense life insurance quotes.
All prices shown are monthly.
No Medical Exam Life Insurance For Parents
Nearly every life insurance provider has options that don’t require a medical exam. That’s true whether you’re looking for whole life, universal life, or term coverage.
Even life insurance for seniors has non-medical exam options.
However, keep in mind that you’re parent’s age, health, and how much life insurance you want may alter your options.
For example, if you want $500,000 in coverage for your mother, who has some health conditions, expect a medical exam as part of the underwriting process.
But usually, adult children can insure their parents without them having to take a medical exam.
An experienced insurance agent can advise you about any exam requirements (if any).
How To Get No Waiting Period Life Insurance For Your Mom Or Dad
Some life insurance coverage has a waiting period of 2-3 years, and some does not.
A policy with a waiting period will only refund your premiums during that time.
Life insurance with no waiting period fully insures your parent for natural or accidental death the day you make your first payment.
To qualify for a policy with no waiting period, you have to apply with a company that requires health questions in the application process.
Your parents don’t have to undergo a medical exam but must complete a health questionnaire.
Typically, aging parents can still qualify for a plan that fully covers them right away.
Check with multiple providers because they all accept and reject different health issues.
Most conditions are insurable except for dire health issues like congestive heart failure, organ transplants, or renal failure, to name a few.
What Is The Best Life Insurance For Elderly Parents?
The age of your older parents and their health will dictate which types of coverage they’re eligible for and which companies might be best for them.
It boils down to whether they are older or younger than 85.
Getting life insurance over 80 is possible with many companies.
However, getting life insurance over 85 is much more challenging because only a few companies will do it.
If your parents are much older, one of the following companies will likely be their best option.
|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|
How Much Coverage Do You Need For A Parent?
The amount of coverage you need entirely depends on why you need life insurance for one of your parents.
The same is true if you’re buying life insurance for a grandparent.
The average funeral costs nearly $10,000. So, if you only need to cover their final expenses, buy $10,000-$25,000 in coverage.
If you need to pay off a debt of some kind, such as a mortgage, just buy enough coverage to pay it all off.
Also, keep in mind that their age and health will heavily influence the cost of the insurance.
For example, life insurance for someone over 70 costs much more than for someone in their 50’s and 60’s.
If you cannot afford as much as you’d like, try enlisting some loved ones to help you pay the higher premiums.
Frequently Asked Questions
Children can buy life insurance for their mom or dad in certain circumstances. Paying for their final expenses is the most common reason. You can also insure a parent to pay for their final medical bills or debts they may leave behind.
It’s best to buy a whole life burial policy for seniors to cover lifelong needs such as funeral costs. Only buy term insurance when covering a temporary problem such as a mortgage or other debt (since those expire after a period of time).
The beneficiary of a life insurance policy is the one who will receive the proceeds of the policy upon the passing of the insured.
The policy owner is the person or entity in control of the policy. Only the owner can change the face amount, beneficiaries, or any other detail.
For example, let’s say you buy a life policy on your mother. You would be the owner and beneficiary (you can name other family members as beneficiaries). Your mom would be the insured.
If she called the insurance company, they would not talk to her because she is not the owner. The insurance company would only be willing to talk to you since you’re the owner.
Insurable interest refers to whether the policy’s beneficiary would be financially impacted in some way by the passing of the insured.
For example, you have an insurable interest in your parents because you would be responsible for their final expenses if they died.
Yes, you most certainly do. There is no scenario where you buy life insurance for any adult without their consent. This rule applies even if you have power of attorney over them.
Generally, life insurance on your parents will not result in a tax liability. The same is true for your own life insurance. While very rare, you should consult with your tax professional about any life insurance proceeds paid to you.