If you’re like most people, you probably think of life insurance as a way to provide financial security to your spouse and children should anything tragic (heaven forbid!) happen to you.
But life insurance policies could also help you care for someone else who might come to depend on you in the future: your aging parents.
Older Americans Are Living Longer
According to the U.S. Department of Health and Human Services Administration For Community Living website, “In 2011, persons reaching age 65 had an average life expectancy of an additional 19.2 years (20.4 years for females and 17.8 years for males).”
With life expectancy constantly increasing, older Americans need more post-retirement income to live comfortably. Unfortunately, not all will have pensions, investments, or social security payments in adequate amounts to sustain them.
A 2013 study by Pew Research found that about one in seven middle-aged adults is providing financial support to both a child AND an aging parent.*
My own parents are in pretty stellar health as they near the age of 70. I expect (and hope) they’ll be around for a good while longer. Have they saved and invested enough to keep up with their bills and put food on the table for another 20 years? While I believe they’re financially in good shape, it’s a conversation I should have with them sooner rather than later.
Life Insurance and Aging Parents
Do you have aging parents who haven’t put aside the funds they’ll need to thrive after they can no longer work for a paycheck? If so, you might consider including them as beneficiaries on a life insurance policy.
Beneficiaries do not exclusively need to be husband, wife, or children. Provided the beneficiaries you designate to receive a death benefit from your policy have what insurance companies consider valid “insurable interests,” you will likely be able to include them.
What Does an “Insurable Interest” Mean?
Life insurance companies will want you to demonstrate your beneficiaries are dependent upon your income in a way that would cause them to experience a loss if you pass away. Perhaps your parents would be unable to keep up with their utility bills, pay their property taxes, cover their health care costs, remain in a skilled nursing facility, or take care of their day-to-day living expenses. Life insurance providers will want you to explain what is at stake for your parents if your income would no longer be there to help support them.
Something I’d be remiss in not mentioning: “Single” doesn’t mean you don’t need life insurance. With the well-being of aging parents a concern, single people who otherwise wouldn’t see value in life insurance might reconsider before putting it out of mind. Also, life insurance can ensure your parents won’t be saddled with your outstanding debt when you die.
How Much and What Type of Life Insurance Coverage do You Need?
Whether you’re married with kids or single, if you wish to ensure your parents will be taken care of if you pass away while they’re still alive, do your homework now. That’s your first step in pinning down the amount of coverage and type of policy that will serve you best. Get a grasp on the expenses your parents face and their ability to pay them on their own in the future. That might involve asking some tough questions, but you need to realistically know how prepared they are to make ends meet in the years to come.
After you have a handle on their needs, you can estimate the amount of life insurance you’ll need to help them by using an online life insurance needs calculator.
To really home in on both the amount and type of policy that will be the best choice, talk with a trusted life insurance professional who can explain the options available to you. Ask about both whole and term life policies. Whole life policies do not expire, but term life policies are extremely flexible and are more cost-effective for the comparable amounts of coverage.
Peace of Mind in Protecting Those Who Raised and Protected You
Wouldn’t you feel more at ease knowing those who have always been there for you will live out their golden years with the quality of life they deserve? If you’re not certain they have the financial fortitude to care for themselves later in life, perhaps it’s time to give life insurance another look.
*Source: LifeHealthPRO infographic. http://www.lifehealthpro.com/2014/04/29/who-is-the-sandwich-generation-infographic. Accessed 12/15/2014.