Can I Buy Life Insurance for My Parents?

Summary: Buying life insurance for senior parents can help cover funeral costs, pay off debts and leave a financial gift to loved ones.

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The emotional toll of losing a parent is hard enough. Add in unexpected funeral costs, legal and probate fees, and possible caregiving debts, and the situation can quickly become overwhelming.

Life insurance for parents is one way to help relieve the financial stress that often accompanies a parent's death, allowing you to focus on grieving and honoring their wishes.

Can you get life insurance for senior parents?

Yes, you can get life insurance for your parents, but not without consent. Your parent must agree and participate in the application process by signing forms and possibly answering medical questionnaires or completing a health exam. Insurers must confirm that you would be financially affected by the person’s death, not just emotionally. This rule helps prevent people from taking out policies on those they aren’t closely connected to, reducing the risk of fraud.

As your parents’ child or caregiver, you can prove insurable interest if you: 

Why consider life insurance policies for seniors?

Life insurance payouts can help cover funeral costs, unpaid mortgages, and other expenses for loved ones. For example, final expenses can easily exceed $10,000 when you add up the cost of a grave plot, casket and burial fees.

You might also want to keep your parents' home instead of selling it. The home can become an inheritance or a source of income. If they still owe money on the mortgage, you can use the insurance benefit to help pay it off. Life insurance can also replace the unpaid care that adult children often provide.

What types of life insurance are available to seniors?

Seniors and elderly parents can buy guaranteed issue, whole life and term life insurance. Here's a chart summarizing the options available and who they work best for.

If you're looking to cover your parents' funeral costs, guaranteed issue insurance is a popular option for seniors with health issues because there's no medical exam required. Its lower coverage amounts also generally make it more affordable.

Sometimes, a guaranteed issue policy is referred to as final expense insurance, but this type of insurance can also be term or simplified issue insurance. Be sure to check the kind of insurance you're getting.

What's the cost, and who's eligible?

The cost of life insurance for senior parents depends on the policy type and factors like age, health, and gender. Term life is usually cheaper than whole life. But it only pays out if your parent passes away during the policy term. Whole life costs more but covers your parent for their entire life, as long as premiums are paid.

The older your parents are, the fewer options they may have. Many insurers don't issue a policy for people above a certain age, often between 75 and 85. And some policies, like guaranteed issue life insurance, have age limits as well.

How to buy life insurance for elderly parents

Here's a quick step-by-step on how to purchase life insurance for elderly parents:

1Confirm consent with your parents and insurable interest

2Decide on the life insurance coverage amount and policy type

3Shop for and compare quotes

4Complete an application and medical exams (if necessary)

5Wait for approval

If you're applying for guaranteed whole life insurance, the application is instantly approved when your payment goes through. The approval can take days or weeks with other types of whole life insurance.

Some policies have graded benefits. This is common with policies that don't require a medical exam, like guaranteed issue or final expense plans. If your parent dies of natural causes during the graded period, the insurer may refund the premiums paid, sometimes with interest, instead of the full death benefit.

Who should own the policy?

Either you or your parent can own the policy. If you own it, managing premium payments or beneficiary updates may be easier. Your parents may prefer to own it to have greater control over their finances and end-of-life planning.

If there's a cash value component to the policy, be sure to check if your parent being an owner would affect their Medicaid eligibility. The cash value may count as a resource for Medicaid.

If unsure, speak with an elder law attorney specializing in Medicaid or contact your state's Medicaid office. Rules differ by state, but with the right strategy, like transferring ownership to a spouse or family member, you can often avoid jeopardizing Medicaid benefits.

How to talk to your parents about life insurance

Broaching the life insurance topic with your parents can feel daunting. Older generations can see life insurance as unnecessary or feel uncomfortable discussing end-of-life planning.

Reframe the conversation

If you think your parents, or your surviving parent, might be resistant to the idea of life insurance, try reframing the conversation. Instead of focusing on the end of life, talk about life insurance as a thoughtful way to contribute to the family's future. Emphasize how it can help protect loved ones, reduce future stress, and ensure their wishes are respected.

Choose a private setting

Choose a calm, private setting to start an open conversation with empathetic language like:

"I want everyone in the family to be prepared for the future, so no one's caught off guard."

Emphasize that it's about some peace of mind for everyone, not about urgency, and that everyone, young and old, should have an end-of-life plan in place.

Give them time

Give them time to process the conversation and space to ask questions or revisit the topic later.

Frequently asked questions (FAQs)

Can I buy life insurance for my parents without them knowing?

No. Legally, your parent must consent and sign the application. They also need to participate in underwriting, if required.

How old is too old to get life insurance?

Most companies won't issue new policies to people over age 85, though some final expense or guaranteed issue plans may go up to age 90. Options become more limited and expensive with age.

Can I be both the owner and the beneficiary of my parents' life insurance?

Yes, and in fact, that's common. As long as you can prove insurable interest, you can be the policy owner, pay the premiums and be the beneficiary.

Does getting life insurance affect my parents' Medicaid eligibility?

Yes, especially for whole life policies with cash value. A policy may count as an asset unless appropriately structured. In some cases, transferring ownership to a trust may help.

If my parent doesn't qualify for life insurance, what are the alternatives?

Pre-paid funeral plans, payable-on-death (POD) bank accounts, and dedicated savings or trust funds can all help cover end-of-life costs. These options may be more practical if your parent is in poor health, very elderly, or doesn't have outstanding debts or financial dependents.