Buying Life Insurance for Your Parents

Buying life insurance for your parents is not necessarily a pleasant task. After all, searching through various companies and policy types is not particularly fun – couple this with the fact that searching for life insurance for your parents requires facing the fact that they will die some day, and this shopping experience can be down right depressing.

Although buying life insurance for your parents is not a pleasant experience, it may be a necessary one. If for no other reason, making sure your parents have a life insurance policy in place will help alleviate your worries about taking care of their burial expenses when the time come that they do pass. If your parents still have outstanding debts, a life insurance policy will also help guarantee the estate is squared away properly at the time of their death.

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When it comes to buying life insurance for your mother and/or father, you will have to display what is referred to as “insurable interest” to the insurance company. Put simply, insurable interest is a requirement that shows that you will suffer some sort of financial loss in the event of your parents’ death. More and more often, insurance companies are requiring proof of insurable interest in order to prevent people from randomly taking out policies on people they think may not have long left to live. This also helps prevent the possibility that someone will take out a policy on someone and then killing that person in order to obtain the money – a morbid thought, but a nonetheless real scenario.

In most cases, it is not difficult for a child to demonstrate insurable interest when it comes to insuring their mother or father and placing themselves as the beneficiary. Once this is established, you need to determine how much coverage will be necessary and what type of coverage will best serve the needs of your parents.

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In the broadest sense, you can choose from whole life insurance or term life insurance. With term life insurance, your elderly parents will only be covered for a period of time. With whole life insurance, on the other hand, the coverage lasts throughout the remainder of your parents’ live. Whole life insurance is more expensive then term life insurance. In addition, if your parents are quite old, term life insurance may be purchased to last until beyond you’re the life expectancies of your parents. This is not to say that one is definitely a better choice than the other – it is a very personal decision that must be based on your unique circumstances.

The amount of coverage you need also depends on the overall purpose of the life insurance. If you are simply looking to have burial expenses covered, an insurance policy with a small pay out of around $10,000 may be sufficient for the job. On the other hand, you may want a larger policy that can be borrowed against in case of medical expenses or that will help pay off other expenses in the event of your parents’ death.

 

 

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