Can I Buy Life Insurance on My Elderly Mom or Dad?

Yes, you can buy life insurance for your elderly mom or dad, but there are certain requirements to consider. Here’s what you need to know:

1. Insurable Interest

• You must demonstrate an "insurable interest" in your parent’s life, which essentially means that you would suffer a financial loss if they were to pass away. This requirement is usually straightforward for children taking care of aging parents.

2. Consent

• Your parent must consent to the life insurance policy. They need to participate in the application process and usually sign the documents. In some cases, they may also need to undergo a medical exam, depending on the type of policy.

3. Types of Life Insurance Available

• Term Life Insurance: This policy is generally more affordable but might be challenging to get for elderly parents, especially those over 75, and it covers a set period (e.g., 10 or 20 years).
• Whole Life Insurance: This type of policy provides lifetime coverage but can be more expensive. It may have a cash value component that accumulates over time.
• Guaranteed Issue Life Insurance: For elderly parents who may have significant health issues, this no-medical-exam policy guarantees coverage, but the death benefit is typically lower, and premiums are higher. It may also have a waiting period of 2-3 years before the full benefit is payable.
• Final Expense Insurance: Specifically designed to cover funeral and burial costs, this type of policy is often a whole life insurance policy with a smaller death benefit.

4. Age and Health Considerations

• Insurance premiums will be higher for older individuals, and any health conditions may impact the policy's cost and availability. Guaranteed issue policies can help overcome these barriers, but they come with higher costs and lower coverage.

5. Coverage Amount

• Decide on the coverage amount based on what you aim to achieve, such as paying for final expenses, outstanding debts, or leaving a financial legacy.

Buying life insurance for an elderly parent is doable, but it's essential to choose the right type of policy and understand the requirements involved.