10 Important Tips To Buying Life Insurance For Your Parents

Written by Choice Mutual | Last updated: October 23, 2018

Life Insurance For Parents

If all you want are some quotes to cover your parents final expenses, you can do so by using the quote tool that is on this page. You won’t need to put in a phone number or email, and you’ll see instant rates from multiple insurance companies in your state.


This guide has everything you need to know about buying life insurance for parents.

So whether you aren’t sure if you need a policy on mom or dad, want a cost estimate, or just want help figuring out which type of policy and company is best for them, this guide will answer all your questions.

Keep reading or click on one of these quick links below to jump to the section of this article that interests you most.

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  1. The 10 Big Tips
  2. Reasons To Purchase
  3. Proper Coverage Amounts
  4. Sample Quotes [See Actual Rates]
  5. Application Pointers
  6. FAQ’s

 

10 Tips When Buying Life Insurance Policy For Parents

Not everyone needs to buy life insurance on their parents. Some do and some don’t. It depends on your situation.

For those that want or need to, here’s 10 proven tips that will ensure you purchase the appropriate policy and get the best deal possible.

Life Insurance For Parents

1. Select The Right Kind Of Policy To Accomplish Your Goal

As you may know, life insurance is a very general term. There are many different kinds of policies available and they all function differently.

Life insurance is a tool used to satisfy a purpose (what the money would be used for). However, not everyone has the same goal in mind which is why there is no one size fits all type of life policy.

Life Insurance For Parents

For example, some people want life insurance proceeds to pay off a mortgage or other debt. On the other hand, some people want life insurance to cover final expenses.

Because those needs are different, they warrant a different type of life insurance policy.

To ensure you actually accomplish your task, it’s vital that you select the appropriate type of life insurance that is best suited to achieve your goal.

Life insurance can be broken down into two main categories. There’s permanent and temporary insurance coverage. They each have their pros and cons, and should be used for different objectives.

 

Permanent Whole Life Insurance & When To Buy It

A permanent whole life insurance policy is just that- a permanent plan that will be with you for your entire life. It will not expire the way term insurance does.

You should buy a whole life insurance policy when you have a want or need that is lasts for an unlimited period of time. Here’s some of the most common examples:

  • End of life expenses (funeral bills, debts, medical bills, etc.)
  • Donation to family, charity, etc.
  • Estate planning

Not surprisingly, the biggest pro to whole life is the fact that it lasts forever. You can always count on it being there to accomplish your objective.

The draw back with whole life insurance is that it costs more than term insurance, but that’s because the insurance company will 100% one day have to pay a claim.

Again, just remember that if the need is permanent, your life insurance should be too. If the need is temporary, then and only then should you buy a policy that is also temporary.

 

Term Insurance & When To Buy It

A term life policy is one that is designed to expire after a preset period of time. Once the term is up, the coverage simply ends. For example, it may last 5, 10, 20, or 30 year years.

You should only buy a term life plan if your goal is to cover a temporary liability that will day end. Here’s some of the most common examples:

  • Mortgage note
  • Car note
  • Other financial debt
  • Income replacement

The biggest pro to term insurance is the cost. By a wide margin, it’s the least expensive of all types of life insurance. However, the draw back is that it expires one day. That’s why you should only buy term when your objective is also temporary.

In general, insurers will only issue term insurance that provides protection up to around the age of 80. Most all term insurance ends at, before, or shortly after the insured turns 80.

If you have a want or need that is permanent, you shouldn’t buy a term plan. If it were to expire before your need is fulfilled, then you wouldn’t resolve the task you set out to accomplish in the first place.

Don’t be allured by the lower cost of a term plan when you have a permanent objective. The money you are “saving” each month won’t help you when the policy is not there when you need it most because it already expired.

Quick Tip: If you need a term insurance plan for one of your parents, it’s best to give us a call for quotes. Our quoting system isn’t setup to quote term insurance. In 60 seconds, one of our agents will be able to give you all the term prices you want.

 


 

2. Avoid Tax Consequences By Doing This

If you were to imagine a life insurance policy as a shape, it would be a triangle. It’s made up of three points which are…Life Insurance For Parents

  1. Insured: The individual whose life the policy is insuring.
  2. Owner: The individual who pays the premiums and has control of the policy.
  3. Beneficiary: The individual designated to receive the death benefit upon the passing of the insured.

To avoid a potential tax bill, you must ensure that two of the three points are the same person.

If all three points are different people, then the death benefit could be considered a taxable gift to the beneficiary.

This situation is often referred to as the Goodman Triangle or the Unholy Trinity.

It’s important to note that if the proceeds of a life policy are considered a taxable gift (which is not always the case), the tax burden falls upon the owner of the policy NOT the beneficiary.

Here’s a basic example.

Let’s say John wants to buy coverage on his mom Mary, and he names his son Steve as the beneficiary. The breakdown would be as follows:

  • Insured= Mary
  • Owner= John
  • Beneficiary= Steve

Upon the passing of Mary, Steve will receive the proceeds of the policy since he is the beneficiary. The IRS will view the death benefit as a gift to Steve since John was the owner of the policy.

He paid for a service (the life insurance policy) that resulted in Steve getting a lump sum of money. In the eyes of the IRS, they look at that as no different than if John had just given Steve a personal check for $20,000.

Just remember, if you are considering buying life insurance on one of your parents, make sure you are both the owner and the beneficiary. Then you have nothing to worry about.

 

Other Tax Considerations

Hopefully we don’t have you worried about creating a tax burden for yourself. As we said, as long as two of the three points are the same individual, there won’t be a tax burden.

But wait it gets better…

There’s other stuff you should know that will also aid you in ensuring you don’t create a tax bill for yourself.

First, the IRS allows for a certain amount annually to be gifted to someone without having to pay taxes.

In 2018, they allowed for a gift up to $15,000 per person. This means you could gift someone up to $15k, and would not need to worry about paying taxes on that amount.

So let’s say you did buy a life policy on your parents. If the face amount is $15,000 or less, the structure of the policy does not really matter because it falls beneath the taxable threshold.

Second, you can always buy a life plan on mom or dad and not be the owner. Instead, you would merely be the payer. You would really only do this if your desire was not to be the beneficiary.

You could list the insured (mom or dad) as the owner. That would satisfy the two points requirement (your parent would be the owner and the insured).

Being the payer and not the owner is another way to setup the policy properly if your goal is to name someone other than yourself as the beneficiary.

Bottom line?

There are many ways to ensure you don’t create a tax bill for yourself. Working with a savory insurance agency (Choice Mutual 😎) will all but ensure you don’t get a bill from the IRS.

 


 

3. Work With An Independent Agent

Know this. There is no single life insurance company that can be the best option for everyone. This is flat out impossible.

They all accept and reject various health issues, which is why there can’t be one company to rule them all.

Here’s the bottom line:

To find the best life insurance policy for parents, it’s imperative that you work with an independent agent because only they can compare offers from dozens of insurance companies. They’ll simply match you with whichever company suites you best.

Life Insurance For Parents

In the realm of life insurance, there are two types of agents that you will deal with:

  1. Captive agent: An insurance agent who can only represent on single company. For example, State Farm is a captive insurer. A State Farm agent can only sell you State Farm insurance. They cannot represent any other insurance company. State Farm strictly forbids it.
  2. Independent agent: An insurance agent who is free to represent as many independent insurance companies as they want. For example, Mutual of Omaha is an independent insurer. They don’t care how many other insurance companies an agent is appointed with.

What type of agent you work with will heavily influence how good of a deal you will get.

Think about it this way…

In your left hand you have one single life insurance company. In your right hand you have literally 30 different insurance companies.

If you had to choose a hand when shopping for life insurance for one of your parents, which hand do you think gives you the best chance of success?

That’s the power of working with an independent agent.

Oh and here’s something really cool.

There is no cost for working with an independent agent. All agents (captive & independent) always get paid by the insurer which is why their services never cost you any money.

 

Why Having Choices Is So Critically Important

Every insurer underwrites differently which is to say they all respond to health issues in their own way.

For example, one company might not like diabetics and will decline them or charge them much more due to their diabetes. On the other hand, another company might be totally okay with diabetics and not respond adversely in any way.

If your mom or dad has diabetes and you work with a captive agent that represents a company that is not fond of diabetics, you are seriously out of luck.

At the same time, if you were working with an independent agent, he or she would simply pivot to the companies that are okay with applicants who have diabetes.

See the difference?

The above example plays out all the time. If your parents have any health issues, its even more important you work with an independent agent, so they can match you with whichever company views their health most favorably.

Going the independent route will result much better coverage and premiums every time.

 


 

4. Your Parents Health: Gather As Much Information As Can

Your parent’s health history is the single most influential factor that determines which companies will accept them, exactly what the price will be, and ultimately which one is best for them.Life Insurance For Parents

For that reason, try your best to become as familiar as you can regarding their health before you begin talking to agents.

Any agent worth their salt will try gather info about your parent’s health history. This will allow them to do their job to find you their best plan.

Here’s the raw truth of it.

If you don’t know about their health, there’s no way an agent can help you. Sure you can still get quotes based on their age and gender, but quotes done that way are theoretical at best. To get any semblance of an accurate quote/offer, you’ll need some information about their health.

You should try to obtain the following:

  • Past & present prescription medications (the more you can get the better)
  • Past & present diagnosed conditions such as high blood pressure, COPD, CHF, diabetes etc (find out when they were diagnosed)
  • Prior major events such as heart attacks, strokes, hospitalizations, cancer, etc. (find out when they occurred)
  • Height and weight
  • Tobacco and alcohol usage
  • Any high-risk habits such as sky diving, rocking climbing etc.
  • Details on any driving violations within the last 5 years

What if you can’t get all that info?

Don’t worry if you can’t get all that information. Make no mistake, you really should try, but if you can’t at least get a list of their medications. Their meds will paint a very good picture of what health issues they’ve had.

As an agent, we can get a preliminary understanding of their overall health just by knowing the medications.

Without question, we would need more detailed information about them prior to doing an application, but for quoting purposes medications alone can often render good estimates.

 


 

5. You DO NOT Need To Be Physically With Them To Apply

Back in the day, you had to physically sign papers which meant you and your parents would both need to be in the same place at the same time.

That’s now how it works in the modern era.

You and your parents could live in totally separate states and still buy life insurance on them.

Life Insurance For Parents

Many life insurance companies today have electronic application processes in place that make this possible. In general, there’s two methods that allow you to remotely buy a life policy on your mom or dad.

  1. Voice Signature: With a voice signature process, the carrier will collect all your information over the phone. They’ll obtain all the necessary authorizations and ask the appropriate health questions (if any). At the end, they’ll have you both sign the application with your voice which will represent your consent just as if you had physically signed the application with an ink pen. Generally, these voice signature processes last anywhere from 10-20 mins, and most of them will render an immediate decision regarding the eligibility of the applicant.
  2. Email Signature: With an email signature, the carrier will send out two emails. One to you, and one to your parents. Basically, you’ll sign the application by clicking a few buttons. Some email signature carriers will render an immediate decision regarding your parent’s eligibility, but most take 1-3 business days to come to a decision.

As you can see, there is no need for you to wait until you go visit one of your parents before buying coverage on them. You can do it any time anywhere!

 

6. Mind Your Budget

You may want to have a certain amount of coverage on your mom or dad, but the question is… can you afford it?

Here’s the bottom line.

If you cannot comfortably afford the monthly payments 12 months out of 12, you should not do it. Buy less coverage.

Life Insurance For Parents

Don’t get aggravated with or hung up by the fact that your budget won’t allow you to purchase what you want.

Remember this.

Some life insurance coverage on your parents is much better than no coverage!

At the end of the day, you’re buying life insurance on your father or mother because you want the money to be used for something (paying a debt, final expenses, etc.).

Isn’t it better to have some money rather than no money even if that amount of money is less than you’d like?

Too many times we’ve seen clients try to take on more than they can chew. It always ends badly because one day life will happen, and your will bills will temporarily rise. When that happens, life insurance on your parent is likely the first thing to go and then you’ve wasted your time and money.

Whatever the monthly payment is, you shouldn’t feel remotely unsure about its affordability. Let your budget be your guide, and you won’t go wrong.

 


 

7. Make Sure You Have Their Consent First

You cannot buy any form of life insurance on someone else without their consent. The insured must agree to the policy.

This rule is true even if you have power of attorney, or if you buy a guaranteed acceptance policy that has no health questions or medical underwriting.

You may be wondering… But I’m paying for it, what then?

Even if you are going to be the one paying for the life insurance on your parents, you still need their consent.Life Insurance For Parents

For the reasons stated, you should definitely speak to your mom or dad or whoever you want coverage on, and ensure they are on board with you taking out the coverage.

Most of the time, their involvement will only consist of answering some health questions and maybe completing an e-signature. It won’t require much of their time and effort, but again they will need to be involved.

So save yourself some time and headache and ask mom and/or dad first 😊

 


 

8. Avoid Guaranteed Acceptance Life Policies If You Can

A guaranteed issue life insurance policy is one where there is no medical or lifestyle underwriting. There’s no health questions or anything. Your acceptance is guaranteed. There’s only two real requirements:

  • The insured lives in a state where the insurer offers the product.
  • The insured has the mental capacity to enter into a legal contract.

If they satisfy those two requirements, they can get a policy.

However, just because you can get one of these guaranteed issue policies doesn’t mean you should. In fact, you should only utilize them as a last resort.LifeInsuranceForParents

Here’s why we say that…

  1. There’s always at least a two-year waiting period before a death benefit would become payable. Because they know nothing about the health of the applicant, they must institute this provision to prevent people on their death bed from buying them and collecting a check a couple weeks later. If the insured were to die during the first two years of the policy, the insurance company would merely refund all premiums paid plus 10% interest (on the money paid; not the death benefit). After two years has passed, the insurer will payout the full face amount for any reason moving forward.
  2. They cost much more compared to life insurance plans that do have underwriting. Because they know nothing about the applicant’s health, they are taking on a much higher level of risk. For this reason, they must charge more for these plans to cover that increased risk. Plans that do assess an applicant’s health cost less because the insurer knows the insured doesn’t have certain health conditions. Therefore, they can charge less.

Ultimately, if you want life coverage on your parents that starts immediately and costs less, avoid guaranteed issue plans unless that’s impossible (it usually is).

 


 

9. Don’t Choose An Insurance Company Based Off How Well Known They Are

In 2016, there were 5,977 insurance companies in the USA (including territories). If you are lucky, you’ve heard of maybe 1% of them.

So are the other 99% companies bad because you’ve never heard their name before? Definitely not.

Here’s the bottom line.

Very few insurance companies advertise on a mass scale to ensure they are a household name. They are no more credible, trustworthy, or financially stable as other insurance carriers that don’t advertise through mass media channels.

So be open to having insurance on your parents from an insurer that you’ve never heard of.Life Insurance For Parents

We say this because every life insurance company underwrites differently. What if your parents have health issues (like diabetes or heart disease) where some of the notable companies won’t take them, but another lesser known insurer will?

Answer: Go with the other insurer that you’ve never heard of because they will accept your parents and offer you a much better deal because their underwriting doesn’t frown upon their health issues.

And make no mistake, these other companies can be completely trusted. Almost all of them have an A rating or higher with A.M. Best, have been in a business really long time, and have strong balance sheets too. The point is; you can trust they will be in business and capable of paying your claim when the time comes.

At the end of the day, you give you best chance possible at securing the best life insurance for your parents if you do not limit yourself only to companies that you’ve heard of before.

 


 

10. Don’t Put This Off

When it comes to life insurance, it pays to be proactive. You simply cannot benefit by waiting.

So if you need or want parents life insurance, do it now. You’ll be glad you did.

Life Insurance For Parents

Now you may be wondering… why do we make this claim?

It’s a fair question. Consider the following:

  1. The older the insured is; the more it will cost.
  2. Your parent’s health is not guaranteed. If they experience a bad down turn in their health, it could severely impact their rates and/or the eligibility altogether.
  3. It may be impossible to avoid a partial or full two-year waiting period. There are some very high-risk health issues where this is a fact. In these situations, you want to start chipping away at the waiting period as soon as you can.
  4. Life gets busy, and if you put this off, it may be years before you get back around to it. We see it every day. Obviously, the topic of life insurance parents is at the forefront of your mind. Don’t let it escape you without acting! You never know when you’ll remember to do it (if ever).

Basically, if you want to pay less, have coverage sooner than later, and have peace of mind, don’t put this off. Get your parents life insurance coverage now.

 

Reasons Why You Should Buy Life Insurance For Parents

If you’re not sure whether or not you should even take out a life policy on your mom dad or one of your grandparents, fear not.

Life Insurance For Parents

The following question will help you figure it out.

Ask yourself…

Will you need money to pay for an expense(s) that arose specifically because your parents passed on?

If Yes: You should absolutely take out a life insurance policy for your parents to pay for whatever bill(s) would arise due to their passing.

If No: You don’t need any coverage on them.

Some of the most common reasons why people buy coverage on mom or dad:

  • Final expenses
  • Medical bills
  • Debts (credit cards, personal loans, mortgage etc)
  • Money needed to take over their home or other real estate

At the end of the day, you may or may not need to buy a life insurance plan on your parents or grandparents. It just depends on your family’s situation.

One thing is for sure. If your parents currently don’t have funds or a plan specifically to pay for their final expenses, you really need to get a policy on them. If not, their end of life costs will fall on you.

 

How To Choose The Right Amount Of Coverage

You’re buying life insurance for your parents because their death would result in a financial loss of some kind.Life Insurance For Parents

With that in mind, what you want the money to be used for will determine how much coverage you’ll need.

Just ask yourself…

How much will it cost to [ insert your objective here ]?

Your answer will tell you how much coverage you may need.


Insider Tip: Choosing the right amount of coverage is important. There’s no doubt about it. However, the importance of coverage amounts pales in to comparison to selecting the right type of policy. As noted in Tip #1, the kind of policy you choose is without question the most important part of the process when buying parent life insurance.


 

Funeral Expenses

The average burial costs anywhere between $8,000-$10,000 according to the National Funeral Directors Association.

Cremation costs substantially less. The average cremation with a funeral service will only run about $2,000-$4,000.

Now, your exact needs may vary from these averages depending on how elaborate you want your parents memorial to be.

With that, those averages give you a really good baseline to determine how much coverage you’ll need if covering final expenses for seniors is the reason why you want coverage on them.

 

Financial Debts

This one is extremely simple. Just add up the total amount of debt you’ll need to pay off. That total would amount to how much coverage you would need to buy on your parents.

 

Medical Bills

Just like financial debts, all you need to do is add up all their medical bills and that’s how much coverage you’ll need.

 

Quotes When Looking For Coverage To Pay For Their Final Expenses

If you’re buying a policy on your parents or grandparents to pay for their final costs, you’ll need a final expense insurance policy to do that.

Below are some real final expense life insurance quotes.


Important Note: You are not limited to these face amounts.You can buy ANY amount of coverage between $1,000- $100,000 in final expense protection. Also, you can instantly view prices from dozens of insurance companies in your state by using the quote tool on this page. You won’t even need to put in a phone number or email 🙂 .


Keep in mind the following as you view these final expense insurance rates:

  • Prices shown are for whole life final expense insurance. These rates would never increase, coverage would never decrease and the policy would never expire at any age.
  • Product availability varies by state.
  • These are non tobacco rates. If your mom or dad has smoked cigarettes in the last year, they will almost certainly pay a higher premium.
  • The health of your parents could affect these prices and/or eligibility.
  • In Montana, females pay the same rate as males.

 

AGEFemale
$10,000
Male
$10,000
Female
$20,000
Male
$20,000
45$22.61 $25.45$42.01$47.69
46 $23.02 $26.17$42.84$49.15
47$23.55 $27.02$43.89$50.84
48$24.18 $27.96$45.16$52.72
49$24.48 $28.52$45.76$53.85
50$24.67$29.16$46.14$55.11
51$25.45$30.30$47.70$57.41
52$25.88$31.12$48.56$59.04
53$26.62$32.20$50.04$61.20
54$27.47$33.61$51.73$64.01
55$28.40$35.09$53.60$66.98
56$29.27$36.45$55.34$69.70
57$30.06$37.91$56.91$72.61
58$30.83$39.27$58.46$75.33
59$31.70$40.82$60.20$78.43
60$32.87$42.76$62.53$82.31
61$34.51$45.38$65.82$87.56
62$36.06$47.90$68.92$92.60
63$37.72$50.52$72.23$97.83
64$39.36$53.14$75.53$103.08
65$41.01$55.76$78.82$108.31
66$43.44$59.35$83.68$115.49
67$45.86$62.93$88.52$122.66
68$48.29$66.53$93.38$129.85
69$50.81$70.11$98.42$137.02
70$53.24$73.70$103.28$144.20
71$56.63$78.36$110.06$153.51
72$60.12$82.92$117.04$162.64
73$63.93$88.01$124.65$172.82
74$67.78$93.16$132.36$183.11
75$72.41$99.53$141.62$195.85
76$78.25$106.87$153.29$210.54
77$83.51$113.64$163.81$224.08
78$88.44$119.86$173.67$236.51
79$93.41$126.23$183.62$249.25
80$98.43$132.65$193.66$262.11
81$106.21$143.00$209.22$282.79
82$113.96$153.54$224.71$303.88
83$121.31$163.41$239.41$323.62
84$128.55$173.28$253.90$343.36
85$135.90$183.15$268.60$363.10
86$174.17$220.83N/AN/A
87$186.67$242.50N/AN/A
88$198.33$264.17N/AN/A
89$210.83$285.83N/AN/A

 

Taking The First Step When You’re Ready To Buy

When you’ve decided that yes you want a life insurance plan for your parents, it begs the question…

Where should I start; what do I do now?

Life Insurance For Parents

Start by talking with them first.

Clarify if they are on board with doing the policy. As mentioned earlier, you must have their consent. There are no exceptions to this rule (even if you have POA).

In addition, get as much info as you can about their health. The more the better.

With those two tasks completed, then you need to find an independent life insurance broker.

As you can imagine, we highly recommend Choice Mutual. Check out what our customers say about working with us.

Whether you go with us or not, make sure you find a reputable independent agency that has access to dozens of life insurance companies.

Tell them your goals and give them all the information you can regarding your parent’s health.

Their job will then be to compare offers from the dozens of life insurance companies they represent to see which one is best for you and your parents.

At that point, they’ll assist you guys in submitting an application to the carrier of your choice.

Speaking of application, you can expect one of the following processes.

 

Voice Signature

Your agent will gather all the information about you and your parents to completely fill out the application. At that point, you, your agent, and your parent or grandparent will complete a brief phone interview with the insurance Life Insurance For Parentscompany.

They will obtain the necessary authorizations from both you and your parents. Furthermore, they’ll ask your parents the health questions for the record.

Almost every carrier that has a voice signature application will give you an instant decision regarding their eligibility on that phone call.

That means you’ll know right then and there if they have been approved or not. Most phone interviews take about 15 minutes.

Both you and your parents will sign the application with your voice, so there is no need for any paperwork to be signed at any point. That phone call 100% takes care of everything.

 

Email Signature

Expect your agent to gather all the information needed to fill out the entire application. At that point, you would get an email from the insurance carrier for you guys to sign. One email would go to you Life Insurance For Parentsand one would go to your parents.

Basically, you guys click a few buttons to sign the application electronically which will submit it to underwriting.

Some carriers offer an instant decision when the application is done via email signature. However, some can take 1-5 business days before a decision is rendered.

Either way, the email signature process takes care of everything. You won’t need to physically sign any paperwork at any point.

 

Paper Application

In some rare situations it may be necessary to send you a paper application for you and your parents to sign.Life Insurance For Parents

Basically, your agent would gather all the information and put it into the app. Then they would email, fax, or snail mail you the papers for you guys to sign. You sign them and send it back to your agent.

Once they receive it, they sign it as well and submit it to underwriting. Expect paper applications to take anywhere from 1-5 business days before underwriting comes back with a decision.

Thankfully, its very uncommon these days where a paper application is actually needed.

 

Frequently Asked Questions

Here are some of the most frequently asked questions we get about buying life insurance for my parents.


Side Note: If you have a question that is not listed here, please let us know! You can call us at 1-800-644-2926 and one of our agents will promptly get you your answer. On the other hand, you can email us at info @ choicemutual.com, and we will post the question and answer to this article within 3 business days.


Life Insurance For Parents

Q: Can I buy a policy on my parents?

A: Yes you can. It’s quite common for kids to purchase coverage on their mom or dad.

 

Q: Can I take out a policy on my grandparents?

A: You absolutely can! Everyday we help grandchildren secure life insurance on their grandparents.

 

Q: Do I need their consent to buy life coverage on my parents?

A: Yes you most certainly do. There is no scenario where you buy life insurance on any adult without their consent. This rule applies even if you have power of attorney over them.

You simply cannot get around this rule. Unfortunately, even if you are the one who is willing to pay for the coverage, if they don’t want to do it there is nothing you can do.

 

Q: What is insurable interest?

A: This refers to whether or not the beneficiary of the policy would be financially impacted in some way by the passing of the insured.

For example, you have insurable interest on your parents because if they died you would be responsible for their final expenses.

To further put this into perspective, you couldn’t buy life insurance on your coworker. Why you may ask? Well, you would not experience some kind of financial loss due to their passing.

Here’s the bottom line.

You merely being the child/grandchild of your parents/grandparents satisfies the insurable interest requirement 99% of the time.

 

Q: What is the difference between the owner and beneficiary?

A: 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 owner of a policy is merely the person or entity that is in control of the policy. Only they can make changes to the face amount, beneficiaries, or any other aspect of the policy.

For example, let’s say you buy a life policy on your mom or dad. You would be the owner and beneficiary. They would simply be the insured.

If they called the insurance company, they would not even talk to your parents because they are not the owner. The insurance company would only be willing to talk to you since you’re the owner.

 

Q: Can I name more than one beneficiary?

A: Yes you can! You can have an many beneficiaries as you want. Furthermore, you can also name as many backup (contingent) beneficiaries as you’d like too.

FYI, contingent beneficiaries would only receive money if and only if all primary beneficiaries were not alive at the time the insured passed away.

About ChoiceMutual.com
About ChoiceMutual.com

Choice Mutual is an independent agency licensed in all 50 states including DC. We work with over 20 highly rated final expense life insurance companies, so that we can compare offers from all of them to find you the best deal.

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