Life Insurance for Your Parents | Compare Quotes

You insure your health, your life, your partner, your car, and your home. Do you really need to insure your parents, too? There isn’t a crystal-clear answer to this, but we can guide you through some questions to consider to determine whether you need to insure family members outside of your immediate household.

Unlike buying life insurance for yourself or your child, you cannot just apply for a policy for mom and dad. You need to make sure you have their consent, and you need to demonstrate that you will use the life insurance proceeds on your parents’ financial obligations and not for your own benefit.

These financial obligations could be any debts they may have, funeral expenses you may face, or any other expenses you may face because of their passing. For example, if your dad provides childcare for your children, his passing would require you to hire another provider—something you could use the death benefit for.

Convincing your parents of the need for life insurance is hard, but shopping for insurance doesn’t have to be. Insurify helps you find an affordable policy from the top insurers in the country. It takes just minutes to fill out the form and answer health questions. Based on your responses, you’ll receive a list of quotes for life insurance premiums.

Can you buy life insurance for your parents?

It is absolutely possible for you to purchase life insurance for your parents, with you paying the monthly premiums and being the beneficiary. There are two caveats: you need their permission, and you need to demonstrate that you have an insurable interest, which means proving you will have financial obligations due to your parents’ passing.

Getting your parents’ consent is necessary because they have to sign the paperwork. They may also need to fill out paperwork regarding their health conditions or get a medical exam done prior to the policy being issued. Medical exams are a pretty standard part of a life insurance policy application, as they give the insurance company an idea of the risk they are taking on by insuring a person.

Having an insurable interest in a person means that you will be financially impacted by their passing and need financial protection. If your parents have a healthy savings account, have already paid for their funeral expenses, and have their own life insurance policies, there’s little risk that you will experience any negative financial impact.

However, if your parents are on a fixed pension and don’t have much in savings, there’s a chance that you will need to cover their final expenses or help the surviving parent with moving or living expenses.

Funeral expenses average $9,000, which means a small life insurance policy, like final expense insurance, will help you afford this without impacting your personal finances. In some situations, like inheriting a house or having to care for a minor sibling, you will want a larger policy to cover the extra expense of paying off a mortgage or caring for a child.

Once you’re ready to move forward with buying the policy, you need to make sure that the payout will come to you tax-free. To do this, you must be listed as both the owner and beneficiary of the policy. Taxes will become an issue if all three people on the policy—the insured, the owner, and the beneficiary—are different.

Besides buying a life insurance policy for your loved ones and managing it yourself, setting up a life insurance trust is another option. To do this, you will need an attorney to create the legal documents for the trust. The trust will then purchase and be the beneficiary of a life insurance policy on your parent. After your loved one passes away, the life insurance will be paid into the trust.

The main advantage of using a trust is to reduce tax obligations if your parents are wealthy. A trust can also help avoid family disputes. As for the disadvantage, there is an ongoing cost to maintain the trust. Finally, not everyone needs a life insurance trust; a legal advisor can help you decide if one is right for your situation.

Buying the Right Life Insurance Policy for Your Parents

Life insurance isn’t a one-size-fits-all product, so you need to know what types are available in order to choose the right one for your parents.

There are four main types of life insurance that will come up as you search: term life, whole life, universal life, and guaranteed life. For seniors, final expense life insurance is a fifth option that should be considered if you don’t need too much life insurance coverage.

Term Life Insurance

With a term life policy, you have coverage for a fixed length of time. Term life policy premiums are on the cheaper side, but payout options are usually quite low for seniors being insured. This is ideal if you have to cover your parents’ final expenses and plan to have the money in 10 to 20 years but would be unable to pay out of pocket in the short term. You’ll have peace of mind knowing that if a parent were to pass away in five years, you would not experience a financial burden. At the same time, you can save up so that funds will be ready once the term insurance expires.

Whole Life Insurance

Unlike term life insurance, a whole life insurance policy will remain in place for your parent’s entire life. These are more expensive because the insurance company will have to make a payout on each policy, unlike term insurance where you may never make a claim on the policy. A benefit of whole life insurance is that it builds up cash value from which you can borrow. You can use it to pay expenses like medical bills or moving your parents into an assisted living home. You can also use your cash value to pay the policy’s premium.

Universal Life Insurance

Like whole life insurance, universal life insurance is a permanent policy. Your parents will be covered as long as you continue paying the premium. The main difference is that universal life offers flexibility. You can increase or decrease the amount of coverage while keeping the policy in place. You can also borrow or withdraw against the cash value as necessary, as with a whole life policy.

Guaranteed Life Insurance

Guaranteed life insurance is a great option if your parents have had serious medical issues in the past or aren’t eligible for other types of life insurance. However, since there are no questions asked about health issues, you will not get the full life insurance proceeds of the policy if your parent passes within the first two years. Since there’s a higher risk of the insurance company having to pay out sooner rather than later, these policies do come at a higher price. But you will have peace of mind knowing that your parents have life insurance coverage.

Final Expense Insurance

Final expense insurance is a type of burial insurance that is a good option for those who just want to pay for funeral expenses. It features low premiums because the payout is modest—just enough to pay for burial and funeral costs. Coverage lasts for your parents’ entire life, unlike term life insurance.

Best Life Insurance Companies for Seniors

There are hundreds of insurance providers that issue life insurance to seniors, so we’ve created a list of the best providers to compare life insurance quotes from.

#1 Mutual of Omaha

Insuring adults up to 80 years old, Mutual of Omaha offers a variety of life insurance products, including guaranteed term life policies. Its whole life and universal life products insure seniors up to age 85 and offer flexible premiums.

#2 AARP (Partnered with New York Life Insurance)

As part of its commitment to the community of retired people, AARP partners with New York Life Insurance to offer life insurance policies at affordable prices. The company offers a variety of riders, including living and accelerated death benefits, which allow you to use funds prior to the insured’s passing.

#3 Guardian

A top-rated insurance company, Guardian writes life insurance for terms between 10 and 30 years. Its whole life policies offer riders such as long-term care, disability, living, and accelerated death benefits for expanded coverage.

#4 Colonial Penn

Flexible rates, long-term coverage, and guaranteed policies make Colonial Penn a great option when it comes to buying life insurance for your parents. It offers policies without rate increases, long applications, or medical exams. Its policies are affordable and start at just $9.95 a month.

#5 Banner Life Insurance

A highly ranked life insurance company, Banner Life Insurance offers competitive rates on its life insurance policies. Banner specializes in term and universal life insurance and offers up to $10 million in term life insurance coverage. Banner’s whole and universal life policies come with optional riders for extra coverage. Additionally, medical exams are waived for senior citizens who are in good health, making it easier to get life insurance coverage for your parents.

#6 Lincoln Heritage

For a variety of options on life insurance choices, Lincoln Heritage is the insurer with the most permanent life insurance and term life insurance policy options. One way to get a cheaper policy is to opt for one that requires a medical exam. Even if your elderly parents are over the age of 90, they can be covered if they are in good health.

#7 American Family Insurance

With American Family’s Senior Whole Life policy, you can get life insurance coverage for your elderly parents quickly and easily. A simple application, and no medical exam, is all it takes to get lifetime coverage for adults between 50 and 80 to cover end-of-life expenses. American Family also offers underwriting on term life insurance as well.

The Best Way to Get the Best Deals on Life Insurance

When you work with an insurance agent, it’s hard to get an understanding of the ranges of life insurance costs and coverages between companies. Insurify takes away the guesswork by giving you quotes from multiple companies so you can easily compare them and choose the best one.

Insurify makes buying life insurance simple. All you have to do is answer questions about the coverage and policy you want, plus personal details about your parents. Based on this information, you’ll get quotes from leading insurance providers.

Comparing life insurance policies will help you get the best deal on life insurance for your parents. Insurify helps you get quotes quickly without having to talk to an insurance agent until you’re ready. Try Insurify’s quote comparison tool today so you can enjoy financial security while honoring your parents’ final wishes.

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