Can I Buy Life Insurance for My Parents? Why Consent is Crucial

Life insurance provides important financial protection for a person’s loved ones. The death benefit can be used to pay off medical bills and burial costs. It can also cover other expenses that the deceased leaves behind and to make up for lost income. In addition to buying a life insurance policy for yourself, you may be wondering if you can buy a life insurance policy for your parents. The answer is yes – but there are some caveats.

Reasons for Buying Life Insurance for Your Parents

Adult children frequently wish to buy life insurance their parents. There are good reasons for this.

  • They may want to handle the costs of the premium, and purchasing the policy seems like an easy way of doing this.
  • They may have heard that a typical funeral can cost $10,000. When people die, they often also leave behind medical bills and nursing home bills that can cost much more. A life insurance policy is a practical way of covering these costs.
  • They may know that their parents will leave behind significant debts, such as mortgages, that will impact the estate, and they need a life insurance policy to cover these costs.

How much coverage you need will depend on your reason for buying insurance. If you just need a policy to cover funeral costs, for example, you don’t need a high limit. Be prepared to justify the coverage limit you’re asking for, especially if it’s high.  

Consent, Approval and Medical Underwriting

Although you recognize the importance of life insurance, you might not be comfortable telling your parents you want to take out a policy on them. This is understandable, but it’s also unavoidable. You need to talk to your parents.

Some policies, especially group policies and those with lower limits, can be purchased without medical underwriting, but getting approved for a life insurance policy often involves a medical exam. The application may also involve medical questions. Clearly, you cannot do this without your parents’ involvement.

Even if the policy does not require medical underwriting, you still need to talk to your parents.

Three parties are important in a life insurance policy. The owner is the person who is responsible for paying the policy. The insured is the person the life insurance policy covers. The beneficiary is the person who will receive the benefit when the insured dies. 

You may be both the owner and the beneficiary of the policy, but your parents are the insureds. As the insureds, your parents need to sign the documents and consent to the policy.

When to Purchase Life Insurance for Your Parents

Average life insurance premiums increase as a person gets older. Additionally, a person who is experiencing medical issues may have a harder time getting approved for a policy and may face higher premiums if approval is granted. Conditions that impact cognitive abilities can also lead to complications in estate planning and financial or medical decisions, as a person’s wishes and consent may not be clear.

For these reasons, it is better to obtain life insurance while a person is still relatively young and healthy. You may find it difficult to talk to your parents about life insurance, but the sooner you do this, the better. 

Would you like to buy life insurance for your parents? Get a life insurance quote now.

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