For parents over the age of 80, it is tempting to purchase life insurance in their name to cover the cost of potential funeral expenses and outstanding debt and provide a financial cushion for the surviving spouse. While the concern is genuine, is buying life insurance for parents without their consent legal?
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Can You Purchase Life Insurance for a Parent without Consent?
The short answer is no; you cannot make such a purchase without the parent’s approval. There are several reasons you cannot, but the primary one is to avoid fraud and wrongdoing by those who may have less than ideal intentions than yours.
It is not legal to purchase life insurance that makes a parent or anyone else the policyholder without their knowledge.
Then, how can I get life insurance for my mother or father?
Yes, it can be done illegally, and many have tried. However, very few have succeeded because insurance companies diligently check the information. This is especially true when it comes to paying off the beneficiaries.
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So, it is not legal nor recommended that you buy life insurance that makes someone else the policyholder unless you have their written permission.
No insurance company will cover a person who does not give their permission to be covered unless, as the child, you have a power of attorney to make that decision.
Is there any price difference?
If you have their consent, purchasing the policy is no different from purchasing one yourself. The only difference in buying life insurance for your father or mother is that the premiums for women are usually 10% less than for men. Otherwise, purchasing insurance for either one will be identical.
Related: Tips to convince your parents to purchase life insurance.
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Whom Can I Buy a Policy in the Family?
You can only buy life insurance that makes someone else the policyholder if they are a close relative, such as a parent, grandparent, or child. Each insurance company has rules regarding who can be the policyholder, but a close relative is a qualification. You should request multiple quotes to understand the life insurance cost for elderly parents. You will get an affordable rate for both your father and mother.
Remember that the policyholder does not have to pay for the insurance themselves. Arrangements can be made so that you can pay for the premiums in the place of your parents. Depending on the type and amount of the insurance purchased, the obligation of the parent ranges from providing their written permission up to answering health questions and having a medical exam.
Why Do People Want to Buy Life Insurance for their Parents?
There are several reasons people want to take out life insurance on elderly parents, but the primary one is to provide financial coverage if the worst should occur. Many people will buy funeral insurance or pre-paid plans that cover burial expenses so that the burden does not have to be addressed when their loved one dies.
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Another reason is the desire of a parent to provide a legacy for their children or grandchildren when they may not have the financial means to pay for the premiums. This allows for an immense benefit that addresses college tuition, a down payment for a home, or other expenses that life insurance can provide.
Important things to Consider:
A few considerations must be made depending on your parents’ age and financial state.
First, you should assess the financial impact of what happens when one of them passes away. This means looking at their monthly expenses and any accumulated debt that needs to be paid, such as mortgages.
Over the next six months, their financial needs will provide insight into the needed benefit level.
Of course, there is the budget required to pay for the monthly premiums, so the benefits should be in line with their needs in terms of affordability.
Health and lifestyle considerations also need to be considered, which affect the price.
From that, you should establish the parameters of the benefits and premiums of the life insurance policy that will adequately cover your parents.
The last step is to get free quotes and compare the rate online.
Suitable Types of Life Insurance for Aging Parents:
When buying life insurance for parents, you must get them the right kind that best fits their needs while staying within budget.
Whole: Sometimes called permanent insurance, this is a policy that does not expire and provides interest on the premiums that have been collected. You can cash out the policy once it matures, so there is some flexibility.
However, it is a more expensive form of insurance, and for those over 65, the interest build-up is not attractive.
Term: There is no interest or cashing out, but term insurance is far less expensive than the whole, making it far more attractive to many considering good life insurance coverage.
Burial: This is life insurance designed only to cover funeral expenses. Therefore, it is best suited for financially secure people, even if one should pass away. Decent burial insurance for parents will not cost a fortune.
Of course, it’s not well suited for those with additional debt or expenses to cover, but it is inexpensive.
Guaranteed: If your parents have a poor medical history or engage in lifestyle choices such as smoking, guaranteed insurance cannot be rejected. There are no health examinations or even questions. If your parents have cancer, this is the only way to get covered. However, it is also the most expensive type of life insurance around.
Second to Die: This insurance is designed for estate planning as it only takes effect when the second parent dies. So, it helps settle the estate once the remaining parent is gone, providing financial benefits to the rest of the family.
How Life Insurance Becomes More Affordable?
To make the life insurance purchase more affordable, there are several factors that you need to consider when making the purchase;
- Health
- Lifestyle
- Medications
- Habits
- Age
- Other Known Risks
Seniors in good health who do not smoke, live in a safe neighborhood, and take only a few medications will pay less for their life insurance.
Therefore, seniors should not avoid life insurance that requires medical exams or health questions unless they have severe medical conditions.
In this case, guaranteed life insurance may be the only option, and here is the list of pre-approved coverage for you.
The bottom line…
Although the temptation to purchase life insurance for your aging or homestay parents without their knowledge may be substantial, it is not legal nor desirable to do so. Getting the parent’s permission is desired and wanted if you can pay the premiums, as it will help you address this touchy subject.