Do you want to know the whole life insurance for parents? Keep reading this article to know what it entails.
There are diverse reasons why you might want to buy life insurance for your parents.
Perhaps you rely on them financially, and you’ll need to replace their income once they’re gone. Or you may want a financial safety net to pay your debts, end-of-life medical bills, or final expenses.
Maybe you are considering buying a life insurance policy for your parents, this article will help you with the knowledge to make an informed choice.
READ MORE: Veterans Life Insurance: What You Need to Know
What Is Whole Life Insurance?
Whole life insurance gives coverage throughout the life of the person insured.
Additionally, to pay a tax-free death benefit, whole life insurance also contains a savings component in which cash value may accumulate.
Whole life insurance policies are one of several types of permanent life insurance, which means they cover you for your entire life. Also, Universal Life indexed universal life, and variable universal life are others.
You can choose a whole life insurance policy that works for you from one of these best life insurance companies.
Can You Buy Life Insurance For Your Parents?
You can purchase your life insurance for your parents but you can’t do it behind their backs.
They must permit you to buy life insurance for them and they’ll go through the normal life insurance buying process, which may include a medical exam.
They’ll have to sign the life insurance application also. To be a life insurance beneficiary on the policy for your parents, you need evidence that you would suffer financially if they died.
For instance, you receive financial support from them or they have a mortgage or other debts you would have to pay after they pass away.
READ MORE: Whole Life Insurance Definition: How It Works, With Examples
Do Your Parents Need Life Insurance?
Your parents may need life insurance if someone would suffer financially if they passed away.
Here are some ways life insurance can ease the financial burden after a parent’s death.
-
Covering Final Expenses
When you think of final expenses, you can often think of costs related to a parent’s funeral. Moreover, a life insurance payout can pay off the parent’s remaining medical bills or other debt.
The payout from the parent’s life insurance policy can enable them to, for example, donate money to their favorite charity or help put their grandchildren through college.
-
Boosting Retirement Income
Maybe your dad died before your mom. When he was alive, he received a pension. But the rules of his pension dictate that the pension benefits end upon his death, leaving your mom with no major income source.
Moreover, the payout from your dad’s life insurance policy can replace some or all of the lost pension benefits.
-
Provision For Early Death Benefit
Some life insurance policies have “living benefits” that allow for some or all of the policy’s death benefit to cover the insured person’s medical bills while they’re still alive.
For instance, accelerated death benefits let someone take money from their own death benefit if they are terminally ill.
Options For Parent’s Life Insurance
You’ll have many options when you want to purchase life insurance for your parents, this depends on their age and health.
Also, choices and affordability decrease with older age and health conditions. You can always buy final expense life insurance with a small death benefit, which depends on the age and policy.
These policies are generally guaranteed to issue life insurance, so the company doesn’t reject the applicant as long as they meet the age requirement.
Here are some types of life insurance that can be suitable options for parents.
Term life insurance has level rates for certain periods like five, ten, twenty or thirty years. Also, it covers the ends when the policy ends unless there is an option to renew If renewal is the option, expect the premium to be higher.
-
Universal or Whole Life Insurance
Universal life insurance and whole life insurance are options if you want to make sure a policy is in place no matter when a parent dies.
It is essential to know that even though universal life is a kind of permanent life insurance, some universal life policies have a maximum age specified.
For instance, the policy may be up to age 96, and to get a high age cut-off is costly.
-
Guaranteed Issue Life Insurance
Guaranteed issue life insurance doesn’t require a medical exam, and you can’t be turned down, so it’s an option for the parent that can’t qualify for traditional life insurance due to health issues or age.
Also, the benefits are low, between $5,000 and $25,000. These policies typically have a waiting period of two years. Before the beneficiary can get the full policy payout unless the cause of death was an accident, like a car wreck.
Additionally, if the policyholder dies during the first two years of the policy, the beneficiary can get a refund of the paid premiums plus some interest.
-
Final Expense Life Insurance
Final expense or burial insurance is meant to pay for a parent’s funeral costs and unpaid medical bills. Generally, the whole life insurance policy supplies a small payout when the insured person dies.
READ MORE: WHAT IS LIFE INSURANCE WITH A RETURN-OF-PREMIUM CLAUSE?
Conclusion
Whole life insurance generally has a level premium and death benefit and gives a guaranteed benefit upon the death of the insured, irrespective of when they die. Among the premiums you pay for a whole life policy go to the savings component known as the cash value. As those funds are invested in the guaranteed return and after it grows big, you can borrow from or withdraw from the cash value, tax-free.
