Buying Life Insurance for Your Parents

You can obtain life insurance for your parents if they give consent and participate in the application process. You’ll typically be the policy owner and beneficiary, while your parents are the insured.

The main reason to get life insurance for your parents is to cover final expenses like funeral costs. It can also replace lost income if you or other family members depend on their financial support.

As the policy owner, you're responsible for paying premiums, managing the policy and receiving the death benefit. In some families, siblings split the cost. Your parents may need to complete a medical exam and provide personal details during underwriting.

Following these steps ensures the process is ethical and adheres to insurer requirements.

Determining the right amount of life insurance coverage for your parents helps ensure the policy covers funeral expenses, medical bills and possibly an inheritance or donation to an important cause. Underestimating coverage, especially for elderly parents, could leave your family with financial burdens, while overestimating could result in unnecessarily high premiums.

To determine how much life insurance your parents need, consider these steps:

Once you've gathered this information, you can use it to choose a policy that aligns with your parents' needs and financial goals. The right amount of coverage balances adequate financial protection with a premium that fits your budget.

Life insurance for your parents offers financial security and reassurance for your family when they die. You might consider it for funeral expenses or debt settlement, among other reasons:

• Funeral Expenses: Funerals can be costly, but life insurance eases this financial burden during difficult times.
• Debt Settlement: If your parents have debts like mortgages, credit card balances or loans, life insurance can pay these off, preventing their transfer to the family.
• Income Continuation: If your parents help support your family financially, life insurance can cover that lost income when they die.
• Estate Planning: Life insurance aids asset distribution and provides an inheritance for beneficiaries.
• Charitable Giving: If your parents support a charity, life insurance can fund a legacy donation.
• Final Expenses: Beyond funerals, life insurance can cover medical bills and legal fees.

Consider how these reasons apply to you and your family and how a life insurance policy could ensure financial stability.

Choosing the right type of life insurance for your parents involves weighing their financial needs, health status and long-term objectives. Each policy type has pros and cons, so take time to assess which best aligns with your family's goals.

Term life insurance is straightforward and often the most affordable option. It provides coverage for a fixed time frame, commonly 10, 20 or 30 years.

If your parents are in relatively good health and you're looking for a cost-effective way to provide financial security for a set period, term life could be a good fit. However, once the term expires, coverage ends, and a new policy will likely cost more due to your parents' increased age.

Term life insurance works well for parents over 60 who need to cover specific financial responsibilities like debts or want to provide an inheritance during their most vulnerable years.

Whole life insurance covers your parents for their entire lifetime and builds cash value as an investment. This type of policy is more expensive than term life but can serve as both a financial safety net and an investment vehicle. Whole life insurance works well if your parents want to leave a legacy or accumulate cash value for future needs.

Universal life insurance gives you flexibility by combining permanent coverage with investment opportunities for your cash value. You can adjust how much you pay and your coverage amount based on what you need. The downside is that market losses can reduce your cash value since it's tied to investments.

Final expense insurance, sometimes called burial insurance, helps pay for funeral costs and other end-of-life expenses. You'll get less coverage than other policies, but it costs less and focuses specifically on these final costs.

If your primary concern is relieving your family of the financial burden of funeral costs, this could be a suitable option. Final expense insurance works especially well for elderly parents since it directly addresses costs from their death, ensuring these expenses don't create financial stress for the family.

Age is critical when selecting a life insurance policy for parents. Different age groups need different types of insurance because people's financial situations change as they get older.

Younger Parents (Ages 25 to 40)

Younger parents may be in the early stages of family life and facing significant financial obligations like mortgages or children's education. Term life insurance works well here because it provides substantial coverage for less money during the years when they need it most.

Middle-Aged Parents (Ages 40 to 60)

As parents enter their middle years, their financial focus may shift toward saving for retirement or supporting older children through college. This age group might benefit from whole life insurance or universal life insurance, which provides lifelong coverage and builds cash value for later use.

Parents Over 60

For parents over 60, especially those managing estates or leaving a legacy, whole life insurance or final expense insurance are suitable options. Coverage for parents over 60 often focuses on end-of-life expenses and financial security for beneficiaries. Final expense insurance works well for this group. These policies ensure their death doesn't financially burden the family while providing fixed coverage regardless of future health changes.

When choosing life insurance for your parents, think about what they need now and in the future, then find coverage that matches those needs.

Securing a life insurance policy for your parents can be straightforward if you know where to look and what to consider. You have several options for purchasing life insurance, each with advantages:

The following table shows how pricing changes based on age, coverage level and policy terms so you know what to expect.

Consider these tips when shopping for the best life insurance for your parents to ensure you get coverage that provides financial security for your family:

Age is one of the most significant factors affecting how much life insurance costs for your parents. Life insurance premiums increase with age. Life insurance for parents over 65 tends to be more expensive than policies for parents in their 30s due to higher risk factors.

For example, a 50-year-old might pay about $45 monthly for a 10-year term policy with $250,000 coverage. The same policy could cost a 70-year-old around $243 per month.

Other factors that affect the cost of life insurance for older adults include:

Getting life insurance for your parents helps you plan ahead and protects your family from financial strain. Whether you're covering funeral costs, outstanding debts or replacing lost income, having a policy in place ensures peace of mind. With your parents' consent and meeting insurer requirements, you can become the policy owner and manage coverage that fits your family's long-term needs.

Getting life insurance for your parents works differently than buying it for yourself, so you might have questions about the process. We've addressed a few common questions to help simplify the process for you.

Why Trust MoneyGeek?

We analyzed 1,488 life insurance quotes alongside customer satisfaction, financial stability reports, product offerings and more to determine the best life insurance companies for parents.

MoneyGeek created a scoring system to compare life insurance companies across five categories and ranked them based on their scores. We chose to review these companies based on their broad national coverage and ability to provide an online quote.

MoneyGeek’s Scoring System

MoneyGeek ranked the top life insurance companies for parents using the following weightings:

• Financial Stability: 35%
• Customer Satisfaction: 25%
• Buying Process: 20%
• Product Diversity: 20%

We did not include affordability in the calculation since we do not have quotes for whole life insurance policies. Of the companies that offer whole life insurance plans, we chose the one with the highest score.

Each company’s score incorporates the following:

• Cost data obtained through online quotes
• Financial strength ratings from AM Best and number of years in business
• Customer satisfaction data from the National Association of Insurance Commissioners (NAIC) customer complaint index (we reviewed annual complaint data from 2020 to 2022, the most recent year available)
• Availability of tools to aid in the buying process, such as online product materials and multiple payment options
• Diversity of life insurance products offered

Sample Customer Profile

MoneyGeek used a standard profile to obtain life insurance quotes:

• 40-year-old male
• Nonsmoker
• 5 feet 11 inches tall and 175 pounds
• Excellent health rating

Premiums are based on the standard profile unless otherwise noted.

We modified the profile by age, gender, height, weight, tobacco use, health rating and geographic location to collect a variety of quotes and determine the best life insurance company for several types of customers. We collected quotes for term life insurance with varying term lengths and coverage amounts as well.

We identified trends in the data set and used those patterns to calculate projections and extend the data beyond what was originally collected.