Should You Consider Buying Life Insurance on Your Parents?
Buying life insurance for your parents is not something we like to think about. Do you know if your parents have adequate assets to cover their final expenses should they die? Will their surviving spouse be able to live on the income and assets remaining if one parent dies? Have you thought about these issues? What can you do about it?
Parents may have debts and funeral expenses that may fall on the responsibility of their adult children. There could be a reduction in retirement income due to the death of a parent to the surviving parent. Will the surviving parent be able to live alone or will you have to take them in to help support them? For these reasons, you may want to consider buying life insurance on your parents.
The idea of buying life insurance on your parents may make sense under certain circumstances. Some parents may or may not discuss their financial situation with their children. Recently, I received a call from an adult child who called to inquire about a life insurance policy on her mother who had recently passed away. Her mother told her she had a life insurance policy that she and her brother were equal beneficiaries of. My research found that the policy expired many years ago and no benefits were payable. When I told the daughter of my findings, she said that the policy was needed to pay for the funeral expenses, which were nearly $20,000. Unfortunately, this policy would not be a financial resource for her.
Another question to consider: Will life insurance carriers permit adult children to purchase life insurance on a parent? Insurance carriers require an insurable interest when purchasing life insurance on another life. An insurable interest must show that you would incur a financial loss if the insured dies. An adult child can state that they are responsible for the funeral expenses and debts of a parent to satisfy the insurable interest requirement as the purpose for buying life insurance on a parent.
About the author: Ken Buccico holds a LUTC designation and has been in the life insurance business for 39 years. His wealth of experience empowers clients to make best possible decision regarding a life insurance policy. To explore the best life insurance option, contact Ken at 1-800-651-1953 or KBuccico@Pivot.com.