Many Americans are living with their elderly parents and almost all ask themselves if they should take out a policy on their parents. In most cases the answer will be Yes! The reason is that in most cases it will affect you financially and a lot of parents actually want to leave something behind for their loved ones. There are many different reasons why a life insurance policy taken out on your parents is a good idea, but if you decide to buy a policy, it’s important to get the right amount and the best type.
As you may already know your parents are an integral part of your family. When I was growing up, my grandparents were my second parents, babysitters, educators and friends. When trying to figure out how much coverage to get its important to get adequate coverage to fill all the gaps and desires of both you and your parents.
Amount of Coverage
If your household is set up in a way where your parents are helping you with your household and watching your children, it’s important to know that this actually will cost you money if one day they were no longer there. In addition to that, some elderly parents will also provide financial assistance to their family from their social security and or retirement income. For example a close friend of mine lost his father who not only would care for the children while he was at work but would also help out with some bills. As you can imagine when his father passed, he had to make a few adjustments, which were easier due to a life insurance policy his father purchased a while back. Let’s not forget to calculate the cost of a proper burial which will typically average between $7400 to $10,000 but make sure to also include unforeseen expenses such as final medical expenses, legal fees and any outstanding bills. In some cases a life insurance policy on your parents can be used as a wealth transfer tool too.
Types of Coverage
In my professional experience buying life insurance for a young adult and elderly parent is quite different. The majority of young families will typically purchase a term life insurance policy for a set period of time like 10 to 30 years because you can get a lot of coverage for a low premium in most crucial years of family building. For people over the age of fifty five it makes more sense to buy a permanent life insurance policy since life insurance rates are typically higher the older the applicant is and you want to make sure the money is available when the day comes not if it comes.
When it comes to permanent life insurance we usually recommend two options which are final expense or no lapse universal life a.k.a guaranteed universal life. Final expense policies are popular among seniors due to the fact you can secure a policy without an exam and in a lot of cases regardless of current medical conditions. The downfall with these policies is they are a lot more expensive and will usually cap the coverage between $10,000 to $50,000 depending on the company. If your parents are not in great health this is a great option. However, if your parents are in good or great health and are willing to complete a medical exam. Then there is a no lapse universal life policy which has the most competitive rates out of all permanent life insurance policies. This coverage is not only more affordable, but will also allow much higher coverage amounts. Of course the downfall is, not everyone will qualify due to their health.
Once you got all this figured out you simply have to find a good agency and set up the policy correctly. When shopping for life insurance make sure to work with an independent agency that has dozens of companies to choose from. That way you save time and get the absolute best deal. A good agency will also advise you on who should be listed as the owner on the policy, explain any tax implications and help set up your beneficiaries. Fortunately, you are at the right place so please call us at 1.888.492.1967 or you can run quotes with our permanent life insurance quoter. Thank you for reading and please drop a comment below to say hello or let us know if we missed anything.
