For years, your parents were responsible for taking care of you. As they get older, sometimes it’s your turn to take care of them.
Many older adults don’t have enough savings to cover their expenses, from unexpected medical bills to rising housing costs. In fact, about 30% of Americans over 45 have no retirement savings, according to PwC’s latest Retirement in America report.
That means your parents might need you to step in at some point to support them financially. Whether they move into your home or you pay for their nursing home bills, the costs can add up. One solution? Life insurance.
If you’re wondering, “Can I get life insurance on my parents?,” the answer is yes. As long as they agree to it, taking out a life insurance policy for parents can provide you with a cash payout to cover the costs of their care after their death. No parent wants to be a financial burden, and life insurance gives you both peace of mind that their needs are covered. Some policies also provide a partial payout during a parent’s lifetime to help with immediate expenses.
Here’s what to know before you buy.
Reasons to get a life insurance policy for parents
Life insurance provides a financial cushion to help loved ones cover expenses after a death. You might already have your own policy to cover your family in a worst-case scenario – and if you have a partner or kids, life insurance is a must-have.
Beyond purchasing your own policy, sometimes it makes financial sense to buy coverage for someone else. When the insured person dies, the policy pays a lump sum of cash that you can spend on whatever you choose, like paying day-to-day expenses, covering debts, or saving for the future. People often buy life insurance for parents to cover common situations like:
1. Paying for your parents’ care as they age
Caregiving for an older parent is incredibly thoughtful, and it can also be expensive. You may welcome a parent to come live in your home or pay for residential care once they’re unable to live on their own. In some cases, you might also take time off work to care for a parent who’s sick or needs help with daily tasks. Once they pass, a life insurance payout can help cover these expenses.
2. Covering health or other expenses now
A 75-year-old spends about $7,000 annually on medical expenses, and a major illness can mean even bigger bills to pay. Some forms of life insurance come with a cash component you can access while they’re living to help cover hospital bills, at-home care, and more.
3. Paying for a funeral.
On average, funeral costs start at about $9,000. It’s important to talk with your parents sooner rather than later about their end-of-life wishes, so you have time to plan financially for them. A life insurance policy is a good way to earmark money specifically for their funeral or related costs.
4. Covering your parent’s debts
No one wants to pass down an inheritance of debt, but sometimes it’s unavoidable. Life insurance can cover any co-signed debts that could impact your own budget if you’re suddenly responsible for paying them off.
5. Helping parents carry out their wishes
A life insurance policy can give your parent a way to leave something behind for you, your children, another loved one, or a charitable cause. You can choose multiple beneficiaries for a life insurance policy, so your parents can carry out a variety of wishes.
How to buy life insurance on a parent
Once you’ve decided a policy is the right move, how do you actually buy life insurance on a parent? These steps can help make the process go smoothly.
1. Talk to your parents about their wishes
Be open with your parents about the type of care they’d like as they get older. For example, will they want to live with you? Are they open to residential care or live-in help? This is also a good time to figure out if there are any causes or family members they’d like to provide for after they’re gone.
2. Get your parents’ consent to buy the life insurance policy
To buy life insurance for a parent, they need to provide consent and be legally competent to sign the paperwork. You’ll also need to prove insurable interest, which means showing that their death will have a financial impact on you. You shouldn’t have a problem with this if you’re supporting them. Finally, you’ll need their personal information, like their Social Security number, to complete the application.
3. Select a plan and coverage amount.
There are several types of life insurance for seniors to choose from based on your parent’s needs. Once you’ve discussed their needs, you can pick the plan and coverage amount that makes sense for both of you. Read on for tips on choosing the right policy for a parent.
4. Choose a beneficiary.
It’s important to assign a beneficiary for your parents’ life insurance so that the money supports their wishes. Depending on the plan you and your parents pick, you can be the sole beneficiary or you can split the benefit between multiple recipients. You may also choose to assign one or more contingent beneficiaries to ensure the money goes to the right people or place.
Can you get life insurance on a parent without their consent?
No, you need your parents’ consent to take out a life insurance policy on them. You can fill out the application for them, but your parents will need to sign it (which also means they need to be legally competent to do so).
What type of life insurance should you buy for your parents?
Once you’ve decided to buy life insurance for your parent, the faster you’re able to do so, the better. Life insurance policies are more affordable when the insured person is younger and healthier.
Wondering about the best life insurance for parents? The right plan depends on your parent’s age and health, your budget, and your financial goals.
If your parent only needs coverage for a specific period of time
Term life insurance can help cover your parent for a few years, like while they’re paying off the last few years of a mortgage or other debts. Keep in mind that term life is generally available for people up to age 70; permanent policies are a better fit for older parents.
If you’re looking for lifelong coverage to cover big bills
Permanent life insurance lasts for your parent’s entire life, as long as you make the payments on it. It’s more expensive than term life, but can provide a guaranteed source of funds to help cover lost wages, medical bills, or funeral expenses.
If your parents want to budget for their funeral costs ahead of time
Final expense life insurance, also known as funeral or burial insurance, is a smaller policy typically used for funeral expenses and related costs. These policies have lower premiums compared with other permanent life plans, so they can be a good choice if you want affordable coverage specifically for these expenses.
If your parent has significant health issues
Guaranteed issue life insurance is often the best option for people who can’t qualify for other policies because of their age or health. Premiums are higher and coverage amounts are lower than other policies, but guaranteed issue can still provide a cushion to cover funeral expenses or other needs.
How much does life insurance for parents cost?
The cost of life insurance for parents is based on a number of factors, including policy type, coverage amount, and the age and health of the insured. If your parents are over 50 or have declining health, they’ll likely experience higher rates. The only way to know for sure how much you’ll pay is to get a quote.
Still have questions about life insurance for parents
If you’re supporting your mom or dad later in life, the costs can add up quickly. Buying life insurance for your parents can help protect you financially, so you’re able to provide them with the best care possible.
Fidelity Life is here to answer your questions and walk with you every step of the way. Get in touch with us or start your online quote today.
At Fidelity Life, our goal is to make life insurance simple, affordable, and understandable for everyday families. This content is intended for educational purposes only. Each post is carefully fact-checked, reviewed, and updated regularly to ensure the information is as relevant as possible.
