Life insurance for elderly parents

1. If you are in the market for, or simply researching, life insurance  for your parents, you have landed in a good place. This article  will address the major concerns involved in buying life  insurance for your parents, including amount of coverage, cost,  and underwriting.    Life Insurance For Your Parents: What About Consent?  The first step in buying life insurance for your parents is consent.  Your will not be able to insure your parents (or anyone else other  than your minor children) without the insured approval.   Part of the consent conversation should revolve around the goal  of the policy. Is it meant to simply cover "final expenses" like  funerals or is it meant to leverage your parents relative good  health into a legacy for the family?  The answer to that question, along with age, health and financial  position , will dictate the type of policy you will be able to obtain. 

2. If your parent has significant health concerns, we advise you to  use the ​customized quote tool​, as it will make an accurate  quote much more likely.   Types of Life  Insurance Policies for  Parents   If your parent is over the age of 75, in poor health , or you are  only interested in funeral expenses, your options will be limited  to so called "final expense" policies.    These policies are either simplified issue or guaranteed issue  life insurance whole life policies. The simplified issue policy 

3. benefit amounts are generally less than $50,000 and  underwriting is done without a medical exam.  Underwriting, in simplified cases generally consists of  application questions that would deny or "knock out" the  application, a computer check on the prescriptions being taken,  and in some cases a telephone call with the insurance carrier.  These policies are usually approved at the point of sale or  within 48 hrs.  Guaranteed policies have no "knock out" questions, however,  they are more expensive and only pay out if the insured lives  through the "graded" period of two or three years (depending on  the carrier). These policies are heavily advertised on radio and  television.  Policies designed for leaving a legacy to the family are generally  limited to insureds under the age of 75 in good health. These  policies, in the form of whole life, universal life, or term  insurance​*​, can have substantial benefit amounts (subject to 

4. financial underwriting). As such, advanced age makes good  health imperative to affordability. Policies that are not graded  as standard or better, so called "table rated policies", would be  difficult to provide any leverage if approved at all.    * Term insurance is meant for a temporary need and may not  considered appropriate for final expense or legacy planning.  Insuring Your Parents  : How Much?  The amount of insurance to be taken out has multiple  components to be considered. In the case of funeral expense  policies the major concern is budgetary. There is no point in  extending yourself beyond what is affordable, as the policy will  simply wind up lapsing.  As a general rule, funeral expenses cost between five and  fifteen thousand dollars depending on your geographical 

5. location. Consider contacting your local funeral home to get an  idea on costs in your area.  With regard to policies intended to leave a legacy, budgetary  concerns are in addition to financial underwriting and leverage  calculations. Financial underwriting will consider if there is a  legitimate insurable interest between the insured and the policy  owner/payor. Additionally, the insured must have legitimate  financial interests to justify the amount of insurance being  requested.  With all the above listed caveats, there is no general cap on  policies due to age. If the insured can qualify, and the  payment/benefit makes sense, the sky’s the limit. 

6. Buying Life Insurance  For Your Parents :  Policy Structure  The manner in which a life insurance policy is structured is very  important from a tax perspective. In addition to the carrier a  policy has three participants: the policy owner, the insured, and  the policy beneficiary. If all three of these participants are  different people, the policy falls into a tax issue known as  Goodman's Triangle.   To avoid the Goodman trap in which the benefit payout to the  beneficiary is viewed as a taxable gift from the policy owner, at  least 2 points on the triangle should be the same person (or a  irrevocable life insurance trust).  In the context of this article, a common mistake regarding  Goodman is for grown children to buy insurance on their 

7. parents and make their children (the insureds grand kids), the  beneficiary.    Use an Independent  Agent When Buying  Life insurance for  Your Parents  A good portion of this site is dedicated to educating the public  about the value of using an independent agent when shopping  for life insurance. The reason for this is that different carriers  have different appetites for specific risks.  So, if you use a "captive" agent who doesn't have access to a  multitude of carriers (50+ in the case of the ​Life Insurance Help 

8. Desk​), you will likely get "shoe-horned" into a policy that is not  the best for your unique situation.  For example if the parent you are trying to set up a legacy  policy with has high cholesterol or had a heart attack, it would  be very important that the application be sent to a carrier that  has a history of looking most favorably on such pre-existing  conditions.  Insuring Your parents  life : Next Steps  Thank you for visiting the Life Insurance Help Desk to research buing life  insurance for your parents. The next step in the process depends on the  health of your parent, if they are in excellent health you can simply usethe  quote tool on the site https://lifeinsurancehelpdesk.com