Can I Buy Life Insurance for My Parents?

Preparing for the Death of a Parent

The thought of having to buy life insurance for your parents can be a daunting one. Between the research involved and the realization and preparation of a parents death, many choose to ignore the situation all together.

Although buying life insurance (level term or permanent) for your parents is not a pleasant experience, it may be a necessary one. If for no other reason, ensuring that your parents have a life insurance policy in place can alleviate worries about taking care of their funeral expenses when the time comes. Especially when you consider that the average funeral costs today are $8,000.00! Plus, if your parents have any outstanding debts, a life policy will help guarantee the estate is squared away properly at the time of their death.

It is possible to buy life insurance for your parents, but you’ll have to display what is referred to as “insurable interest” to the insurance company. In other words, it’s required that you can prove you would suffer a financial loss in the event of your parents’ death. This is becoming a common practice to avoid serious crimes in which people would commit murder to obtain a policy holder’s death benefit.

In most cases, however, it is not difficult for a child to demonstrate insurable interest when it comes to insuring their parent and placing themselves as the beneficiary. Once this is established, you need to determine the type and amount of coverage you’ll need.

Whether it be a whole life policy or a term life policy, be sure to read all of the terms and conditions before deciding which one will benefit you the most. Keep in mind that the amount of the death benefit should depend on the purpose of the life insurance, If you’re looking to simply cover the burial expenses, a small payout of around $10,000 may be sufficient. On the other hand, you may need to a larger policy that can be borrowed against in case of medical expenses or other debts.

Regardless of what you choose, making the choice to prepare now for the death of a parent can help to lessen the blow of the loss by allowing you time to grieve instead of worrying about the costs.