Should I get life insurance for my parents?
It can be difficult to watch parents get older and know they could be gone soon. What’s more, if you depend on your parents for financial support, you could be in a bad spot if something happens to them unexpectedly. One way to hedge against this is by considering a life insurance policy.
If you’re on the fence about getting a policy, here’s what you need to know to decide if you should get life insurance for your parents.
There are a few situations where it makes good financial sense to get life insurance for your parents, like when:
- You’d be responsible for debts: If your parents plan to leave you a mortgage or another large debt that you won’t be able to handle on your own, a life insurance policy can help bridge the gap. This can also apply to medical bills for end-of-life care which can be a significant financial burden after a parent passes away.
- Funeral costs will be expensive: Paying for a funeral service can be a huge financial strain. Some children may choose to take out a guaranteed whole life insurance policy for their parents to cover these final expenses.
- The surviving parent needs to be moved: Sometimes, after the death of one parent, children choose to re-locate the other parent to a closer location. That can be an expensive process, especially if you live far from the surviving parent. The right life insurance policy can help pay for moving expenses and get your surviving parent set up in a new place.
To get life insurance for your parents, you’ll need to meet a few qualifications, like:
- Showing an insurable interest: One major requirement to take out a life insurance policy on a parent is proving an insurable interest. That means you will be financially affected if your parent is gone. For example, you may want a policy to cover burial expenses, estate taxes, a co-signed debt, or to cover the mortgage on your parent’s home that you’re set to inherit.
- Receiving consent from the insured: You can’t take out a life insurance policy on another adult without them knowing. You’ll need to have a conversation with your parents and have their consent to take out the policy.
- Proving that your parent is healthy: Whether you’re taking out a policy on yourself or someone else, health status is a determining factor. That means it may be more challenging to get a policy on a parent who is in poor health or has pre-existing health problems.
Before you begin researching life insurance policies, you’ll need to talk to your parents to get their consent. Then if parents are agreeable, you can work with them to determine what size policy is appropriate and who will benefit, as well as deciding between whole and term life insurance.
Once you decide how much life insurance you need, who will pay for the policy, and who should be listed as the policy owner, you’ll submit an application. Then, the insurer may ask to speak to parents or complete a medical exam. Finally, if approved, you’ll sign a contract with the insurer and begin paying premiums.
The question of whether or not to take out life insurance on parents depends on your insurable interest in their life and whether they consent to it. If you would be negatively financially impacted by your parent’s death, taking out a life insurance policy can make sense. But be sure to be transparent and communicate your intentions to your parents before talking to a life insurance company.