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Yes, You Can Buy Life Insurance On Your Parents
When your parents pass away, their funeral costs, debts and estate taxes could be left to you to pay. Taking out a life insurance policy on your parents can help alleviate some of the financial burden of their death and ensure you are prepared to handle their final expenses.
Why Consider Purchasing Life Insurance for Your Parents?
The average cost of a funeral is around $10,000, an expense that will likely be left to you if your parents do not have a life insurance policy.
Your parents may also have unpaid medical bills, mortgage balances, car loans and credit card debt. A life insurance policy can help cover some of these expenses to lessen the financial burden on you and your family.
What Kind of Life Insurance Should You Choose?
Although there are two main types of life insurance (term and permanent), you may find it difficult to take out a traditional, fully underwritten term or permanent policy on your parents due to their age or health.
Guaranteed issue life insurance policies offer smaller payouts (usually less than $20,000) that can help you cover your parents' final expenses, including their funeral and burial costs. These policies are usually age restricted.
Even better, your parents don't have to pass a medical exam or answer any questions regarding their past or present health. These plans may have a graded death benefit for an initial period of time.
How Much Coverage Will you Need?
This question depends on what you hope to cover with the policy. A policy with a payout of $10,000-$15,000 may be enough if you are just looking to cover funeral and burial costs. However, you may want to purchase a larger policy if you're also planning to cover estate taxes, medical expenses and any unpaid consumer debt your parents may have.
Make sure you discuss all of these matters with your parents before buying a policy.
A licensed agent can help you better understand your options and match you with a policy that works for you. Speak with a licensed agent at 800-966-7169 or read through our guide, Determining Your Life Insurance Needs to learn more.
*Applications for insurance may be subject to acceptance by insurer. Rates and coverage amounts will depend upon the carrier selected.