Most life insurance questions are in “first person” meaning a person looks for personal policies to protect themselves.
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However, what if you’re looking to purchase a life insurance policy on your parent’s name? Will you be able to do this? Is it legal?
The answer to this question will be provided in this read. Let’s take a glance at the core details to consider.
The term used to describe purchasing a life insurance policy for a third party is “insurable interest.” In general, you will be illustrating how your parent’s death will lead to a financial loss in your life. This has to be proven before the life insurance policy is approved and sold.
Most children can showcase this in one way or another. If that’s the case and approval goes through, you’re listed as a “beneficiary” of the life insurance.
You may not be permitted to purchase life insurance for anyone, but when it comes to parents, you should.
Permanent Of Level Term Insurance
You will be presented with two options when speaking to an insurance agent. You will be able to select between permanent or level term insurance. Permanent is as the name suggests going to cover the rest of the parent’s life, while the level term is built for a set period as decided between both parties.
Looking at the pros and cons of both is important.
It will depend on the coverage you’re getting. It will vary from person to person.
The average life insurance policy with “insurable interest” looks to have funeral costs paid as this will come out of the child’s pocket when their parents pass away. The insurance policy will cover this, but others can cite other costs as well.
This will depend on the type of coverage being provided, and how much is paid in premiums.
Best Age To Purchase
The next question comes down to when the best age is for you to buy life insurance as insurable interest? Well, it doesn’t matter how old your parents are. They can be young or old; the policy can be purchased at any time.
Many children are seen buying life insurance policies at a young age for their parents. In fact, many clients are listed at the age of 80 for having life insurance, but this will depend on the situation and when the application goes through.
It’s never too early nor is it ever too late.
It’s best to speak to a local insurance agent and see what they’re able to offer in coverage before making a decision one way or the other.