In the grand scheme of life, sometimes the tables turn. Traditionally, buying a life insurance policy for parents isn’t typically discussed, but that doesn’t mean it never happens. There are many reasons why you might need to purchase a life insurance policy for your parents! In some cases you might rely on them financially or you may just desire a financial safety net for the future. Either way, buying life insurance for your parents is possible. So let’s discuss the best way to decide how to go about it.
Life Insurance Policy For Parents
You can certainly buy a life insurance policy for your parents, but you do need a few things first.
First, your parents need to give you permission to purchase a life insurance policy for them. This will start the standard life insurance purchasing process. It may include a medical exam, and they will also have to sign the policy application. Then, you have to verify your beneficiary status. You will need to prove that you would indeed bear their financial responsibility after they pass away, giving you insurable interest. An example of this would be: having to pay off their mortgage after their death. Most children qualify for insurable interest after their parents pass away, so this shouldn’t be an issue.
Do Your Parents Need Life Insurance?
As we expressed earlier, there are many reasons why your parents might need a life insurance policy. Let’s go over a few of them:
- A life insurance policy for parents could help cover final expenses. This includes more than just funeral costs. It can help pay for remaining medical bills, a mortgage, and any other leftover debt.
- Certain policies have ‘living benefits’. These allow most or all of a policy’s death benefit to cover the insured person’s medical bills while they are still alive. ‘Accelerated death benefits’ is a good example of this. If someone is terminally ill, it lets someone take money from their insurance policy to benefit their family.
- Sometimes, in unfortunate cases, pensions or certain benefit policies can cause further harm after a parent passes away. An example of this would be: the rules of your mom’s pension mandating that her benefits end upon her death…leaving your father alone with no major source of income. When you purchase a life insurance policy for parents, this could help replace some or all the lost benefits–boosting retirement income.
What Are My Options?
Luckily, you have many choices when it comes to a life insurance policy for parents. The plan you choose may be dependent on their age and health. So it is best to buy a policy as soon as you know that you need one. Here are a few options usually available for this situation:
Term Life Insurance is the most popular type of coverage and lasts for a specific set of years (usually 10-30). If you pass while the policy is still in effect, your beneficiaries will receive an insurance payout. If you are looking for a more affordable option, term life insurance is a simple plan that will provide your loved ones with a financially safe net income.
Whole Life provides lifelong protection as long as premiums are paid–unlike term life insurance which offers coverage for a specific period. With this type, you pay premiums until age 100 and cash value typically earns dividends or a fixed interest rate yearly.
One of the key features of whole life insurance is its cash value component. As policyholders make premium payments, a portion of the premium is allocated toward the policy’s cash value. This cash value can be accessed by the policyholder through policy loans or withdrawals. The cash provides a valuable source of liquidity for various financial needs, such as supplementing retirement income or covering unforeseen expenses.
Guaranteed Universal Life is similar to a term life insurance policy but it lasts until the age you choose. Premiums always stay the same and the death benefit never decreases. This policy provides a no-lapse guarantee as long as premiums are paid as outlined with policy loans may affect this if used. The cash value is built in small amounts but is only used to supplement premiums in later years.
At Arlington Greene, we can help you decide what works best for your family. We prefer to review all the options possible, and never pressure you into one policy over the other. If you need help or have any questions about purchasing a life insurance policy for your parents, please reach out and we will be happy to help!
If you are still curious about how mortgage, debt, beneficiary duration and savings will all play together, Arlington Greene has a free Life Insurance Calculator! It’s easy to use. If you have any questions we also offer free quotes from our trusted advisors.
How Much Coverage Is Correct?
Here are some questions to ask yourself when considering insurance your parents:
- Do your parents have debt that could be passed on?
- Do your parents have a mortgage that could be passed on?
- Do your parents have money set aside for funeral costs?
- Will they need end of life care? Will you need help with this cost?
- Do you have money for other expenses like stray property taxes?
Once you figure out how much coverage you will need, choosing a plan will be easy!
Need A Life Insurance Policy For Parents? Call Us Today!
Coming to a decision about life insurance can be so much to consider. With so many different policies it can be hard to determine what you need, all on your own. At Arlington Greene, we have experts in the life insurance field who are ready to help. Arlington offers all the same policies that you would find going directly through a specific insurance company. We can also help you find the right coverage at the best rates by comparing all side-by-side. Our team can help you decide on whatever plan is best for your situation. We can curate a plan just for you—guiding your family into securing your financial future!