Life insurance on your parents can help cover funeral costs and any debts they leave behind for you, such as mortgage or loan balances.
First step to creating an employee benefits policy should be an open discussion about its necessity and gaining consent for its implementation.
Getting Started
If you want to purchase life insurance on behalf of your parents, they must consent and complete an application process that involves providing some personal details as well as potentially undergoing a medical exam. When discussing this topic with them, try doing it in a calm yet reasonable way as this discussion could prove uncomfortable; yet necessary nonetheless.
Assuring the financial wellbeing of your parents will ease the strain on both yourself and your family after their passing or extensive care needs arises. Money from such policies may be used to cover outstanding debts, funeral costs and lost income as well as end-of-life care costs such as home health aide services.
As either an insured or beneficiary, you can purchase a policy on your parent. When making this purchase, it is essential that both of you agree on who will be responsible for paying the premium payments; you could either choose for them to own and pay their own premium payments, or both of you be jointly responsible. Identifying who the owner of the policy is is critical since they will need to submit personal details, undergo medical exams, and make any modifications or additions as well as submit personal data relating to policy changes and updates.
Financial professionals can assist with this process and explain your options, usually suggesting term life insurance which usually has limited years of coverage and only covers your parent’s death. Qualifying for such policies typically is straightforward as long as there are no serious illnesses or diseases present.
Your parents could benefit from purchasing a whole or universal life insurance policy with accruing cash value that will provide for end-of-life expenses as well as long-term care rider that covers part of their death benefit should they require care in an assisted living facility.
Getting Permission
Discussion of end-of-life wishes isn’t easy, but every family must discuss it. The first step should be assessing how much life insurance your parents need and having this conversation together, if they’re open to discussing such things.
Without their consent, taking out life insurance cannot happen; that means they must answer all application questions and participate in a medical examination, even if you fill out their paperwork on their behalf. If they refuse, there’s little chance they’ll ever become insured with us.
Life insurance policies on parents require having “insurable interest,” meaning a financial stake in their death. This could mean outstanding debts or loan balances that must be paid upon their passing; funeral costs; or income replacement for dependents in their absence.
Life insurance policies on your parents do not only require having insurable interest; you also require their written permission – either personally or with a signed and notarized letter.
If your parent does not wish to discuss this matter with you, a written statement that acknowledges their awareness of and agreement to the application process – this statement can then serve as proof when applying for insurance policies.
Filling Out the Paperwork
Applicants who want life insurance will need to complete all necessary paperwork. Most life insurers offer application forms on their website or by calling them directly, with some also accepting phone applications from policyholders directly. When filling out forms for life insurance applications for parents, ensure all pertinent details such as their desired amount of coverage are listed on each application form and provided when appropriate. In some instances a medical exam will also be necessary as part of the underwriting process – where policyholders will need to submit blood and urine samples while answering health-related questions in order to determine eligibility for coverage eligibility.
Purchase life insurance policies directly on your own instead of applying on behalf of parents can be advantageous if you want ownership, paying down debt, or using it for other reasons. Document requirements vary based on what kind of policy is purchased and its intended use; pay stubs or financial documents that demonstrate your relationship to an insured can show proof of insurable interest if applicable – some policies even require proof of insurable interest such as proof that their death would financially impact on you directly!
Once you have the necessary information and your parents’ approval, the process for getting them a policy can start. Younger and healthier applicants have higher odds of being accepted; hence why it’s wiser to start early so as not to miss any deadlines.
As policyowner, it is your responsibility to select beneficiaries for your parents’ policy. Your choices as beneficiaries could have serious ramifications on their finances after death – be sure to carefully consider each option when making this important decision.
Getting the Policy
Before purchasing an insurance plan for your parents, it is crucial to discuss their financial needs and goals. Doing this will allow you to select an adequate level of coverage while fitting their plan within their budget. Several factors should be taken into consideration here including age and health as well as any outstanding debts and funeral/estate settlement expenses they might leave behind after death.
Once you understand your parent’s financial situation, you can begin exploring options for life insurance coverage for them. Carefully consider cost, term length and benefits before making your choice; additionally speak to both of them about who should pay their premium and if you want ownership or beneficiary status on any policy they purchase; some families split this responsibility between siblings or even spouses.
Once you’ve selected and obtained consent for a policy, it’s time to submit an application with an insurer for medical underwriting. This process entails physical exams, blood and urine tests and review of medical records – it could take several weeks, so it is best to start early!
Dependent upon the policy type you select, your parent may be required to submit additional documentation showing insurable interest. This might include pay stubs showing current income or proof of ongoing medical treatment as well as financial details that will help determine if their policy will be approved and its cost.
Once your policy is active, be sure to store copies of all documents safely. Set up automatic payments so the premium is always paid on time. Furthermore, discuss it annually with your parents to review any necessary changes to make. Life insurance provides your parents with peace of mind during end-of-life expenses or other life events with peace of mind.
