What to Consider When Buying Life Insurance for Your Parents
Buying life insurance for parents is a unique process that requires many different considerations. You can choose between burial, term, or permanent life insurance policies. The best life insurance for your parents will depend on your financial dependence on them, your budget, and the reason for buying them a life insurance policy. Keep in mind, the older the applicant is when signing up for life insurance, the more they'll pay in monthly premiums for less coverage.
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UPDATED: Jan 4, 2022
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- There are different scenarios in which you might choose burial, term, or permanent life insurance for your parents
- You could buy a life insurance policy for your parents to cover their funeral expenses or to establish financial stability upon their passing
- Your parents must agree to the life insurance policy for the underwriting process to occur
If you are worried about the financial impact after the death of your parents, you need to find out if your parents have term or permanent life insurance. Buying life insurance for parents could be an effective way of providing financial stability for their beneficiaries.
Buying a life insurance policy for someone else can be a little confusing. We’ll help by explaining how to buy life insurance for your parents, special considerations during the buying process, and more.
Ready to learn more about buying life insurance for your parents? Keep scrolling or enter your zip code above to get free quotes from the top life insurance companies in your area.
What to Know When Buying Life Insurance for Your Parents
Buying a life insurance policy for your parents can be a smart decision, especially if you rely on them financially. This includes indirect expenses such as a mortgage, vehicle, tuition, or other monthly payments.
Buying life insurance for your parents is more about suiting your financial needs when they die. The type of policy and the associated coverage will be unique to your specific situation.
In some cases, it can be very helpful to buy a life insurance policy for your parents. For example, many people don’t realize how expensive funerals can be. Even the most basic life insurance policy can help deter some of the financial stress associated with a funeral.
When should I consider buying life insurance for my parents?
As mentioned above, one common time to consider buying your parents a life insurance policy is when you are growing concerned about the high expenses related to a funeral.
Funerals can cost more than $10,000, which is a major expense that can create a lot of stress. According to the National Funeral Directors Association, the average funeral is $7,848 but this can quickly climb depending on the services and your region of the country.
If you rely primarily on your parents’ income to pay some of your larger expenses, it could be worthwhile to invest in a life insurance policy for them — especially if they don’t already have a policy of their own.
If your parents own their own business, they might not have a life insurance policy since many policies are offered by employers.
There are a handful of more specific situations in which you might want to consider buying your parents a life insurance policy. Those scenarios include the general concept that you want to receive a notable death benefit when your parents die.
This notion remains true whether you want the death benefit because you rely on their income, live on their property, or if they have many outstanding debts.
These are just a few examples of scenarios in which a death benefit could help you maintain your financial stability.
Buying life insurance for your parents is more about protecting yourself in most cases. Most of the time, a standard tender term life insurance policy will suffice due to the death benefit.
In other situations, you might need to consider other life insurance policy types or policy features to make your parents’ life insurance policy more flexible.
What type of life insurance should I buy my parents?
Buying a life insurance policy for your parents will require a handful of considerations. This includes your budget, the reason for the policy, and the amount of coverage.
In most cases, a term life insurance policy will be good enough, but sometimes a whole life insurance or universal life Insurance policy would be preferred. The latter policies typically cost more, which will affect your ability to pay the monthly premium.
Whole and universal life insurance policies accumulate a cash value which can be used for some of your parents’ medical expenses. A term life insurance policy doesn’t offer that type of flexibility.
A standard death benefit isn’t usually able to be used for anything until the policyholder is deceased. Some life insurance riders will allow you to withdraw a certain percentage of the death benefit before the policyholder is deceased.
These life insurance riders are typically referred to as “accelerated death benefit” riders. Different life insurance companies will have various options and might call them by different titles unique to the company.
Additionally, the scenario in which you can accelerate the death benefit might be rather specific.
Some common examples include disability riders or long-term care riders. With these riders, the death benefit would only be eligible for acceleration if the insured becomes disabled or if they need long-term care such as in a nursing home.
In short, it’s important to analyze your parents’ health in addition to their financial situation before you purchase a life insurance policy for them.
The best life insurance for parents over 60 might not be the same for parents under 60, so you’ll need to determine what makes the most sense based on your situation.
How much will life insurance for my parents cost?
The amount you’ll pay for your parents’ life insurance will largely depend on the policy type you choose. If you decide to invest in burial or final expense insurance you can expect to pay much less than if you were to purchase a permanent life insurance policy.
Burial insurance is typically less expensive since it yields a much smaller death benefit when compared to a traditional term life insurance policy.
Some examples of burial insurance rates include:
|Age||AARP - Male||AARP - Female||Foresters Financial - Male||Foresters Financial - Female||Transamerica - Male||Transamerica - Female|
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Term life insurance is often viewed as the most affordable life insurance option because it yields a large death benefit at a reasonable monthly cost. These rates depend on your age and health.
If you are buying life insurance for your parents, there’s a good chance their policy will be much more expensive than yours. Below you can see how much more expensive life insurance is for older adults from some popular life insurance companies.
|Age||State Farm - Male (20-year)||State Farm - Female (20-year)||MassMutual - Male (20-year)||MassMutual - Female (20-year)||State Farm - Male (Whole)||State Farm - Female (Whole)|
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Permanent letter insurance is generally viewed as the most expensive option due to the cash value component. Above you can see sample life insurance rates for similar age groups with a whole life insurance policy compared to a term life insurance policy.
As you can see, whole life insurance is much more expensive each month when compared to term or burial insurance. However, the police will generate cash value that can be used in special situations.
Assuming you have the monthly finances, you can still consider using whole life insurance on parents as an investment but whole life insurance for parents over 65 can quickly get expensive.
More About Buying Life Insurance for Parents
Buying life insurance for your parents is a unique process that requires many considerations. The policy you choose depends on your financial situation, relationship with your parents, your budget, and more.
Before you commit to an insurance policy, you’ll also need to choose a trustworthy life insurance company. It’s important to get quotes from multiple providers so you can find the best rate from the most reliable company.
From there, you can determine which life insurance company offers the most realistic policy based on your needs. Don’t forget to get quotes with any necessary life insurance riders since they typically come at an added cost.
If you are dependent on your parents’ income and you are unsure of how much life insurance to buy, it could be to wise to use a term life insurance calculator.
Lastly, it’s important to know that you cannot buy your parents a life insurance policy without their approval and usually a signature. This is simply to prevent insurance fraud.
So, can I buy life insurance for my parents? Yes, you can. Can you buy life insurance for a parent without their consent? No, you’ll need to have their approval in most cases.
If you buy a traditional life insurance policy, there’s a good chance your parents will need to undergo a medical evaluation. If they fail to comply, you may not be eligible to purchase certain policies. You can purchase a no-exam life insurance policy, but this convenience tends to come with an added cost.
As a whole, it’s advisable to be sure your parents are okay with you buying a life insurance policy for them. They will need to have some involvement initially to create and purchase the policy.
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Buying Life Insurance for Parents: The Bottom Line
Buying life insurance for your parents can be stressful. You will hav many considerations prior to buying them a policy. In many cases, it can be helpful to buy your parents a life insurance, but only if you can afford it.
We hope we helped you understand the process of buying life insurance for parents. To get a head start, enter your ZIP code below for free quotes from the top life insurance companies near you.