The idea of taking out a life insurance policy for someone else can be a bit confusing, but it is possible. If your parents do not have a life insurance policy or the means to purchase one, you are able to do it yourself and this article will explain how, as provided by Insurechance.
Best Life Insurance for Parents
As our own parents age, some of the responsibility for their care and wellbeing falls back on us. When choosing life insurance for your parents, there are a lot of things you will need to consider such as the length of the term, the amount of coverage, the number of premiums, and other factors that make up the policy. The following are the best options to consider when taking life insurance for parents.
Universal Life Insurance
Universal life insurance is a type of policy that lasts a lifetime, but unlike whole life insurance, it has lower premiums. It has two components, the savings component, which is also the cash value component and the cost of the insurance amount. The cash value component grows through interest-based on the minimum interest rate or the current market interest rate.
Term Life Insurance
Term life insurance is a great insurance policy if you want to pay low premiums. There are other advantages of term life insurance like its simplicity also makes it a good option. Term life insurance provides coverage for a set amount of years, eg 5 years, 10 years, 15 years, and so on, with the maximum being 30 years in most cases.
Whole Life Insurance
Whole life insurance is a permanent type of insurance that provides coverage for the rest of the life of the insured individual. If you can afford the high premiums for whole life insurance then it would be a good option. Also, if your parents have an unfinished mortgage payment, debts, car payments, and other loans, whole life insurance benefits would help to fulfill these needs, since the payout is usually high.
Final Expense Insurance
Another type of life insurance you would consider for parents is final expense life insurance. Funeral and burial expenses are quite high, and having an insurance policy to pay for it when your parents die would go a long way to reducing the financial burden left behind.
How to Buy Life Insurance for Your Parents
Before buying a life insurance policy for your parents, there are a few things that you will need to consider. It’s important to respect their wishes – especially if there is a gap between what you want and what they want. Here is a quick rundown of how to buy life insurance for your parents.
Consent and Insurable Interest
It would be unethical of you to take out an insurance policy for your parents without their consent. Even if the idea of purchasing a policy for them sounds like a good one to you, they might not want any bought for them. After you gain their consent, you will also need an insurable interest before applying for the policy.
You will also need to establish their financial needs to help you choose enough coverage for them. If you can, then consult a financial adviser to help you make the decision, but also make sure to shop around for different offers from different insurers before buying.
Ownership and Beneficiary
Chances are that you will be both the owner and beneficiary of the policy if you are buying it for your parents. It does not necessarily have to be the case, but make sure to choose who will be the policyholder and the beneficiary of the policy.
The payer of the policy is the person responsible for making premium payments and in this case, it might be you or it might also depend on the arrangement between you and your parents.
Life insurance is as important as it is for other people. Before taking out any policy for them, you need to understand the different components for each life insurance policy before purchasing. As long as you know what your parents want, then it is easy to make a decision that honors their wish.Category: Uncategorized