Can I Get Life Insurance on My Parents?
You understand why you would get life insurance for yourself — for a small monthly premium, your loved ones receive financial protection in case you’re not there anymore.
But there might be people in your life whose death would cause you financial hardship, including your aging parents. Which raises the question — can you take out life insurance on your parents?
Why you might want to take out life insurance on your parents
One of the most pressing issues when one or both of your parents die is whether they have enough money saved up to pay for final expenses. These expenses can be significant, depending on the circumstances. If your parent spends several days, weeks, or even months in the hospital before they die, there could be medical bills that need to be paid.
Surveys have found that 56% of Americans have medical debt. More than 25% of Americans have a medical debt of more than $10,000. Other studies have found that the average cost of dying in the U.S. is more than $19,000. Funeral costs can cost more than $3,000, cremation fees can run over $4,000, and final medical treatments are the most expensive at over $12,000 on average.
Estimates vary, but the point remains: Death and dying in America can be very expensive.
If one of your parents dies and you need to move the remaining one in with you or to a care facility, the costs continue to rise. Paying off any remaining debts also adds to end-of-life costs.
Not everyone is able to save enough to cover final expenses. Health insurance policies, including Medicare, cover medical bills up to the policy limits — but the coverage may not be enough to pay for it all.
This means that those left behind are left to pay medical bills and any debts left to family members. If you don’t have enough saved, one option is to ensure your parents have life insurance with enough of a benefit to cover these expenses.
Can you take out life insurance for your parents?
If your parents don’t have life insurance, you might want to purchase a policy for them. But first, you must have what the industry calls an “insurable interest.” This is basically establishing that you would suffer a financial loss if the insured person were to die.
Eligible financial interests generally include, but are not limited to, the following expenses and debts:
- End-of-life medical expenses
- Inherited financial obligations
- Cosigned debts
- Other costs of caring for a parent
- Funeral services and burial or cremation costs
If you can provide proof that you’ll be responsible for these expenses, you’ll be able to buy life insurance for your parents, if you have their permission and participation in the process. But they’ll need to go through the medical underwriting process to get coverage. This process determines whether or not the insurance company will provide coverage and how much it will cost. If they aren’t eligible for coverage, you may not be able to get a policy.
Pre-existing conditions may influence the insurer’s decision to cover your parents. For example, if they have health issues that are more developed than average for their age, they might be able to get coverage but with higher premiums. The higher the risk your parents have of complications and death, the higher their premiums will be. The worst-case scenario would be the company denying the insurance application due to underlying health conditions.
Your options for life insurance policies for your parents are the same as they are for you. There are three main types of life insurance.
Term life insurance is coverage that lasts until a specific date, called the term length.
For instance, you might be able to find a provider that will cover your parents until they’re 75 years old. When they reach that age, the coverage ends, and hopefully, they have enough saved to cover their expenses.
These policies generally come with smaller premiums compared to other plans. If your parents die before turning 75, the plan pays out the benefits as specified in the policy. (It’s worth noting that, at Haven Life, persons over the age of 64 cannot receive a term life insurance policy.)
Permanent life insurance (whole life insurance is one common type) lasts for the rest of the covered person’s life. So, if you purchase a permanent life policy, it won’t expire until the covered person dies. When that happens, the benefit is paid to whoever is listed as the beneficiary. This type of policy is typically more expensive than term life insurance, because it covers the years when you’re older and often less healthy.
There is also guaranteed issue life insurance. That’s a whole life policy that skips the medical underwriting and health questions.
Because there is no health evaluation, insurance companies charge much more for this type of life insurance. But it might be one of the best options for an aging parent with health issues if you can afford it. (Again, note that Haven Life does not offer a guaranteed issue whole life policy.)
How to get life insurance for your parents
The best choice is for your parents to purchase life insurance for themselves, ideally while they’re young(ish) and healthy(ish). Which, unfortunately, was probably when you were quite young, maybe even a baby, so you probably weren’t able to persuade them to get affordable term life insurance coverage. (Though if you did manage to persuade them, we salute you!)
That said, getting life insurance for your parents is possible. But first, you need their permission to proceed. If they object to you getting life insurance for them, you can’t really do much about it.
Once you have permission, you should become familiar with their financial situation. Find out how much they have in savings and take inventory of their assets. Find out your parents’ wishes for a funeral or end-of-life celebration, and budget accordingly. Take an assessment of their overall medical conditions and learn about their medical coverage — most importantly, find out how much their policies will cover at the end of life.
This information will help you determine how much coverage your parents might need (or if you need coverage at all). From there, the application will go through the normal process, with medical exams and so on. Again, however, Haven Life does not offer policies to those 65 and older.
A final thought
Going through this experience with your own parents can often get you thinking about how you want to provide for your own children.
At Haven Life, we know the importance of getting life insurance for yourself, to protect your loved ones in the event the worst should happen to you. Start your journey toward peace of mind by getting a free online life insurance quote today.