Can You Buy Life Insurance On Your Parents?
It’s quite common for people to take out a life insurance policy on themselves or a spouse. But can you buy life insurance on your parents? And why would you want to do that?
The answer is yes, you can buy a life insurance policy on behalf of one or both of your parents. Now all that’s left to determine is why and how such a purchase would be made.
Reasons for Buying Life Insurance on Your Parents
Buying life insurance for yourself is typically done to replace your income when you die. So it only makes sense then that buying life insurance on another person is done when the death of that person could affect your financial situation.
Many children are still financially dependent on their parents for helping out with things like student loans, cars, rent, health insurance and more. A 2011 study found that 59% of parents still provide financial support for their adult children. And for the first time in more than 130 years, the No. 1 living arrangement among 18-to-34-year-olds is with their parents.
Even if you are no longer financially dependent on your parents, you may still be dependent on them in other ways that hold value. They may watch your children while you are at work, saving you from the expensive cost of daycare. If your parents were to pass away, the cost of childcare is one you would now need to take on.
Another reason for buying life insurance on your parents is to help out with the cost of their funerals. A proper funeral will cost several thousand dollars, something you may not be able to afford. Your beneficiaries can choose to use the proceeds from a life insurance policy to pay for your final expenses.
Life insurance policies can also help pay for living expenses, like mortgages, bills and other costs. However, beneficiaries may use the death benefit however they see fit.
Do Your Parents Have to Know?
Having a conversation with your parents about buying a life insurance policy on their behalf can be a difficult one. But it’s also one that typically cannot be avoided. Your parents will have to sign their consent on the policy application and may be required to undergo a medical exam.
A licensed life insurance agent can answer questions about buying a life insurance policy on behalf of your parents.
This is an advertisement for life insurance.
Applications for life insurance may be subject to acceptance by insurer. Issuance of the policy may depend upon answers to health questions. Rates and coverage amounts depend upon the carrier selected. Your policy may be subject to underwriting approval. You will receive only the benefit amount in the policy issued.