Buying Life Insurance for Elderly Parents
If you want to learn about insuring your parents you’ll want to read this article. Subjects we’ll discuss here are your legal standing to buy insurance for elderly parents, whether you should purchase insurance on their behalf, and the best type of insurance to obtain if you choose to do so. After reading this article you should be able to choose the right type of insurance, properly purchase a policy, and obtain it at the best price.
Not Necessarily Pleasant, But Necessary
Buying life insurance for elderly parents is not a particularly pleasant chore. It requires the acknowledgment that he or she will pass on some day. Since you have read this far we’ll assume that you are highly motivated to solve a financial problem related to their passing.
Can You Insure Another’s Life?
First, a question: is it possible to insure the life of another person? There are laws in place to prevent schemes which would allow someone to profit from the insured death of another. To obtain a policy for your father or mother you’ll need to prove what is called an “Insurable Interest” – that is to say, will you suffer some sort of loss in the event of your parents death. Generally it is not too difficult for children to prove an insurable interest, and place themselves as beneficiary to a parents’ policy. Burial expenses that may accrue to survivors are one reasonable “insurable interest” item, accrued medical debts could easily be another.
Should You?
Should you take out insurance coverage on your parents? The answer here depends upon your circumstances. If you or your parents have good assets, and particularly cash on hand, then the answer may be no. Somewhat more likely is that ready cash for a modest $10,000 funeral, or its related travel, transportation, and ancillary costs, would be welcomed. If your parents have significant health issues then a larger policy that could be a source of equity to borrow against would be advisable.
Another scenario which might occur is the use of life insurance to balance bequests, say if there were a residence or other indivisible asset, and there were multiple beneficiaries. The cash balance of the policy could equalize things for the heirs.
Term Or Perm?
Which type of insurance term or perm? Generally term insurance for elderly people is ill-advised. The insurable period, or term, of the policies are short, and when they end the insured must undergo new health checks to keep the policy in force. Permanent insurance, or insurance which covers you for your whole life, is more expensive on a monthly basis than term life policies, but it accumulates a “cash value” which can be borrowed against for a variety of expenses such as medical costs. Generally the preferred life insurance for elderly people is whole life for these reasons.
Where Do I Find It?
Where do I find the right policy? Life insurance for the elderly has been designed for easy issue and is available through many outlets including the Internet. While most insurance companies offer burial insurance or final expense insurance the best way forward we believe is to find a specialist. There are a large number of independent insurance agents who specialize in the senior insurance market, and they reside in almost every community.
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