Elderly Life Insurance: Can I Buy This for My Mom or Dad?

Because the gap of financial equality in the US has continued to expand, many are feeling the woes of barely meeting their own financial obligations. The adult children of elderly parents therefore have a growing concerns on how to pay for a parent’s final expenses. Funeral cost, including cremation or burial, can be very expensive. So this can easily create an unexpected financial burden. The sudden burden of taking care of the inevitable cost of mom or dad’s passing can disrupt their financial stability. So this raises the common question… Can I buy Elderly Life Insurance on my mom or dad? The answer is YES, in many circumstances, and like any other insurance product, it can be an important safeguard of your financial stability and security.

Therefore, buying elderly life insurance on a parent is possible and often advantageous. A few basic criteria can help evaluate when and if it’s a good idea. These include:

1. They must be able to qualify for insurance.
   1. a. Possibly take an exam, plus answer some health questions
   2. b. If health not perfect, possibly a simplified issue (No Exam, with less questions)
   3. c. If quite unhealthy, could consider a guaranteed issue (No Exam plus few to no questions)
2. They can’t be in a nursing home or not of sound mind.
3. The death benefit can’t be more than the economic / financial loss if they were gone. Meaning… Mom who lives on Social Security making $13,450 per year will be limited to usually 3 – 10 times income unless other financial information dictates a greater need.

What do I look for in a Life Insurance Policy for my parents?

The life insurance product, program, or company that best fits your needs, and the needs of your parents, will depend on several factors. These include:

1. The health of your parents.
2. Your parents age.
3. The amount of coverage that fits your needs.
4. The anticipated duration of the policy need.
5. The state the policy is written in.

The life insurance policies for senior individuals fall into three basic categories based largely on the factors listed above. They include:

Fully Underwritten – Usually very little major health in last 10 years (Heart, Cancer, Stroke, Narcotics or Alcoholism)
A few common choices are AIG, American National, Transamerica, Foresters, Mutual of Omaha

Simplified/Modified Issue – reasonable health for age with some major health last 10 years may include a period of 1-3 years which partial or return of premiums only will be paid if death occurs.
A few common choices are American National, Foresters, and Mutual of Omaha

Guaranteed Issue – Can usually write most health conditions but will usually have a period they must live before benefit will pay.
A few common choices are Great Western, Americo, Senior Life

When considering the purchase of Life Insurance for ones parents it may or may not make financial sense when comparing the price to the value received at a death. However, one huge financial advantage has remained for life insurance, the IRS usually considers life insurance benefits to be income tax free to the beneficiary.

If you have questions about insuring your elderly parents please don’t hesitate to call Chris Wilson at (619) 980-7263. He can explain the benefits as they relate to your own financial position and recommend what coverage best fits your needs.