As our parents get older, we tend to become more involved in their estate planning and final expense needs.
Many times, things we assumed would be taken care of such as wills, trusts, life insurance, etc…..are not.
It’s more common than you think.
Things to consider when buying life insurance for your parents?
Life insurance provides flexibility, allowing you to help your parents plan for their estate regardless of its size and complexity.
The type of life insurance needed depends on the reason for the coverage.
Some of the more common requests we receive include:
- Final Expenses – Coverage to take care of final expenses, funeral costs, etc. You can get a small policy to take care of these needs now at a lower cost than you would need to pay out of pocket when your parents die.
- Estate Equalization – If there is a family business, real estate, collectible assets, etc. that are going to one family member, life insurance is a way to provide equal amounts to other family members.
- Parental Support – You and your siblings may be providing financial support to your parents, and life insurance provides a way to give back to you when your parents pass.
- Estate Maximization – In some cases, parents have assets that they do not need to in order to maintain their lifestyle. It’s possible to purchase life insurance on a single pay or limited pay basis, whereby the premium paid provides a death benefit substantially greater than the asset would provide.
- Vacation Homes – If there is a vacation home that is being kept in the family, life insurance may be used to pay off any mortgage debt, fund future upkeep and expenses, and more.
- Grandchildren – Sometimes grandparents want to provide for their grandchildren’s future. Life insurance may be a great way to provide for them at a lower cost than outright gifting of other assets.
Who pays for the parents’ policies?
Depending on your parents’ financial situation, maybe they have the resources to pay the premiums.
Other times, the children may work together to pay the premiums on the policy.
If looking at substantial amounts of coverage and premiums, trusts are typically involved with gifting being used to minimize estate tax exposure.
What type of life insurance should you buy for your parents?
In most cases, a permanent life insurance policy that will not be outlived is the best option.
For others, a term life insurance policy is good.
Something to keep in mind is the premiums for permanent life insurance policies as they may be substantial.
It may make sense to look at permanent life insurance such as whole life or universal life and term life insurance depending on your objectives.
You may mix and match if it meets your needs.
It’s also important to look at any life insurance riders that may be available to help you.
Are your parents insurable?
Health problems are a concern of many when looking to insure their parents.
Our expertise is life insurance underwriting, and we’ve helped insureds with histories of cancer, diabetes, heart disease, mental health issues and much more.
Life insurance options available include guaranteed issue life insurance, fully underwritten, and no medical exam life insurance.
When available, fully underwritten life insurance offers the most affordable life insurance.
We’ll review your parents’ health history with you and let you know what options and pricing are available for them.
There is never any obligation or pressure with our service.
We’ll provide you with the information you need in order to make an informed decision about your life insurance.
If you would rather discuss your request first, please call us at Toll-Free (800) 909-2040. Thank you.
Michael Horbal is the founder and owner of RiskQuoter.com and a licensed life insurance agent who has helped thousands with affordable protection for families and businesses.