Thomas Barnett If you have elderly parents and are concerned about their longevity, you might wonder if they have life insurance and what it would take to get a policy if they don’t. Handling the loss of a parent is already challenging enough without any financial ramifications.
This article will break down how to buy life insurance policies for parents, which policies make sense, and any life insurance policy features that could benefit your elderly parents or yourself.
Every family’s situation is a little different, but after reading a few short sections, you should be prepared to invest in a life insurance policy for your elderly parents.
Buying Life Insurance Policies for Parents
If you’re looking to buy a life insurance policy for a parent or parents, you’ll have a handful of things to consider. You’ll need to evaluate the purpose for buying a policy, your budget, and whether or not they will approve of the policy.
For starters, you cannot purchase a life insurance policy for your parents unless they agree to the policy. This is a process used to prevent insurance fraud in which a caretaker might be looking to score an easy payout from a life insurance death benefit.
Assuming you’ve gotten approval from your parents, you’ll then need to identify a policy that meets your needs and falls within your budget.
Considerations When Buying Life Insurance for Elderly Parents
There are many different life insurance policy options available but not all of them are practical for older adults. Some of the most common policy options are term life insurance, whole life insurance, and universal life insurance.
Whole life insurance and universal life insurance policies are considered permanent life insurance policies because they offer coverage over the remaining lifespan of the policyholder. These types of policies might not be necessary for older adults.
Why? Permanent life insurance policies accrue cash value that can generate interest over time. If your parents are elderly, they won’t be able to generate much interest unless the purchaser is able to pay the entire policy in full.
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On the other hand, term life insurance only offers coverage for a predetermined number of years and emphasizes a more significant death benefit than permanent life insurance options without any cash value component.
If you’re looking to buy your elderly parents a life insurance policy to cover outstanding debts they may have, such as a mortgage, this would most likely be your best option.
Another form of life insurance for older adults is burial or final expense insurance. This is sometimes referred to as funeral insurance for parents and is designed to cover the costs of a funeral. Funerals can sometimes exceed $7,000, according to the National Funeral Directors Association.
If incurring a $7,000 debt would be a major deal for you but you don’t necessarily need a large death benefit to cover your parents’ debts, burial insurance would most likely be the most reasonable option at a reasonable monthly cost.
How much is life insurance for elderly parents?
The amount you pay for your elderly parent’s life insurance will depend on the type of policy you get, the amount of coverage, their age, their health, and more. In general, burial insurance is the most affordable, followed by term life insurance, and lastly, permanent life insurance.
With term life insurance, rates can increase drastically by age. So while you might have a policy as an adult child, life insurance for elderly parents over 80 can be overwhelmingly expensive. Many life insurance companies won’t even cover adults after they reach a certain age.
| Age | John Hancock, Male | John Hancock, Female | MassMutual, Male | MassMutual, Female | Nationwide, Male | Nationwide, Female |
|---|---|---|---|---|---|---|
| 30 | $9.64 | $8.78 | $9.23 | $8.53 | $11.75 | $11.48 |
| 65 | $55.74 | $37.74 | $61.68 | $42.64 | $76.63 | $56.25 |
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You can see above that term life insurance rates get much more expensive for older adults. Many people would consider 65 years old as the threshold for elderly adults, but keep in mind that these sample rates could climb with age.
Otherwise, the sample rates serve as a reminder that you can expect to pay more than five times the amount for your parents’ life insurance policies if you choose term life insurance. Whole life insurance can be even more costly.
| Age | Male - $100,000 | Female - $100,000 | Male - $250,000 | Female - $250,000 | Male - $500,000 | Female - $500,000 |
|---|---|---|---|---|---|---|
| 60 | $399.24 | $311.63 | $988.97 | $769.94 | $1,971.84 | $1,533.79 |
| 65 | $528.00 | $421.69 | $1,310.87 | $1,045.09 | $2,615.64 | $2,084.09 |
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You can see above that whole life insurance rates are much higher for older adults if you want a substantial death benefit. For higher coverage amounts, this could add up to more than $2,000 per month. Burial insurance tends to be the most reasonable.
| Age | AARP - Male | AARP - Female | Foresters Financial - Male | Foresters Financial - Female | Transamerica - Male | Transamerica - Female |
|---|---|---|---|---|---|---|
| 65 | $168.00 | $136.00 | $108.31 | $78.82 | $109.48 | $79.68 |
| 70 | $200.00 | $165.00 | $144.20 | $103.28 | $145.74 | $104.41 |
| 75 | $228.00 | $190.00 | $195.85 | $141.62 | $196.49 | $142.21 |
| 80 | $268.00 | $213.00 | $262.11 | $193.66 | $276.88 | $204.65 |
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The rates above are for $20,000 in burial insurance, which may be more than you’ll need. Lower coverage amounts could be cheaper. Depending on the age of your parents, these may be the only policies that openly provide sample rates.
More About Life Insurance for Elderly Parents
Cost is usually a major priority for those looking to invest in a life insurance policy. If you’re already investing in a life insurance policy, there could be some policy features that may benefit you, referred to as life insurance riders.
Some life insurance riders to inquire about include:
- Long-term care rider
- Disability rider
- Terminal illness rider
- Return of premium rider
These life insurance riders could help your parents as policyholders as well as you, assuming you’re funding the life insurance policy. Long-term care and terminal illness riders can accelerate the death benefit associated with a term or whole life insurance policy in special circumstances.
In short, you can use the death benefit to cover unexpected medical expenses in these circumstances. The disability rider can reduce premiums if the policyholder becomes disabled.
The return-of-premium rider offers a refund (full or partial) on policy premiums if the policyholder outlives the policy. If you purchase a 10-year policy and a parent outlives the policy, your money doesn’t just disappear.
Some of these life insurance riders may come at an added expense while others will be complimentary. It depends on the company so be sure to ask.
Buying Life Insurance for Elderly Parents
Buying life insurance can be a stressful process. When buying life insurance for your elderly parents, you’ll want to make sure you consider the coverage you need, how much you’re willing to spend, and how flexible you need the policy to be.
At the end of the day, a life insurance policy could help prevent incurring any major expenses that could cause turmoil in your life. Be sure to get your parents’ approval before you start searching for policies.
