Different Types of Parents Life Insurance Covered and Know How to Get It

Talking about the parents life insurance policy, around 1 billion American families are dependent on life insurance for retirement and financial security. So, why don’t you go for it?

According to the LIMRA reports, 68 percent of Americans with life insurance policies feel more secure than 47 percent of those without insurance policies.

Parents life insurance policies have become a need in today’s life, or it’s essential to opt for a life insurance policy for parents to secure their lives. The reason could be manier – you’re financially dependent on them and need to replace their income after their death. Or you may need financial safety cover to pay off their debts, medical bills, and other expenses. So, if you’re also willing to buy a parent’s life insurance policy, you’re in the right place. 

Why is Parents Life Insurance Needed?

Buying a life insurance policy for parents ensures that the financial shocks they may get will have cushion benefits. Let’s look into different ways in which parents life insurance can ease you after their death.

• Offer paper cushions from the financial shocks that you may get after your parents’ death.

• Aids in financial planning in an organized way.

• To achieve financial independence.

• Helps in increasing retirement income.

• Offering an early death benefit as some life insurance policies have “living benefits” that allow all the death benefits to cover the medical bills of insured persons until they are alive.

• You are leaving a legacy behind them in the form of funds that can be used to donate money or help grandchildren through college.

• Aids in covering your financial expenses like medical bills and paying off debts.

• Offers financial security against increasing healthcare prices.

How to Get a Life Insurance Policy for Parents?

One can buy a life insurance policy for parents only after they permit it. During the whole process, you need to give their name and address. 

You can select the type of parents life insurance depending on their age, health, and financial wealth. After the purchase, your parents might undergo a medical test. Furthermore, they have to sign the life insurance application form.

To be a beneficiary in the policy that you’re purchasing for your parents, all you need is to prove that you would become financially unstable after their death. This ensures you’ve an “insurable interest” in buying a life insurance policy for your parents, which will be a great deal.

According to the Forbes list of 2024, Progressive, Transamerica, USAA, Pacific Life, and Penn Mutual are the best life insurance companies for seniors. And if you’re searching for the life policy for parents, these might be the best fit for you, as you can end your search here.

Types of Parents Life Insurance 

You may have numerous options when buying parents life insurance, depending on their health and age, as affordability and choices reduce with health conditions and older age. Let’s learn about some types of parents life insurance that will best suit their needs.

1. Term Life Insurance

Term life insurance is available only for a specific time, which, includes 5, 10, 20, or 30 years. The life cover ends with the end of the policy term unless you get the renewal option. You can expect a higher premium if there is a renewal option.

The primary benefit of term life insurance for parents is that it is cheaper than other types of life insurance. It might be best if your primary concern is covering the years of a debt or mortgage or replacing income if the parent dies.

2. Universal or Whole Life Insurance

Whole life insurance provides financial security for the whole life (until the age of 99-100). It is a method to leave behind a legacy for your family, which aids in financially supporting them in case of your parents’ sudden death.

So, if your parents are dependent on you to fulfill their financial needs for the rest of your life or more extended period, you can go for the whole life insurance policy.

These types of Life insurance cost more than the term life insurance. However, you can depend on getting a death benefit irrespective of the fact when a parent dies. 

Also, check out – Term Life Insurance Vs Whole Life Insurance

3. Guaranteed Issue Life Insurance

Guaranteed issue life insurance does not need an individual to qualify for a medical test, and you cannot be left out. Hence, it is an excellent option for a parent who can not qualify for traditional Life insurance because of age factors or health issues. It will provide you with inner peace, knowing they will be best taken care of irrespective of any situation.

Guaranteed issue life insurance provides very minimal death benefits, usually between $5000 and $25,000. These policies also offer a two-year waiting period before the beneficiary can receive the entire death claim from a policy unless the cause of the insured person’s death is an accident. Otherwise, if the insured person dies during the policy’s initial two years, the beneficiary can claim to get a refund of all the premiums and interest they had paid.

4. Final Expense Life Insurance

Final expense or burial expense or funeral expense refers to paying for the funeral cost of parents and some unpaid medical bills. It is typically a whole life insurance policy that provides less payout in case of the death of the insured person and is simple to get approved. 

This life insurance relates to a small whole-life policy with a face value of $2000 to $35,000.

Final expense insurance offers a death benefit to cover expenses like embalming and a cremation, casket, memorial, or funeral service. However, beneficiaries can leverage the death benefit according to their choice, be it by paying a property tax or clearing off debts.

5. Variable Life Insurance

Variable life insurance is a permanent life insurance type that offers stable death benefits to your family till you pay your premiums. Variable life insurance is cash-value life insurance, unlike whole life insurance, which you can use to create wealth.

The ability to invest the cash value amount of the policy makes it a quirky one. Nevertheless, you can invest accrued cash value into several investment options in the form of bonds or MF.

You can see indispensable profit in your cash value account if you make better investment choices. Insurance companies usually allow you to use this profit amount to escalate your death benefit. On the contrary, bad investment choices could harm your cash value account and make you lose money.

6. Mortgage Life Insurance

Mortgage life insurance helps your family cover your mortgage payments after your death. These policies do not have a cash value component as a term life insurance product.

Like traditional term insurance policies, mortgage life insurance is not linked to a specific number of years or age. They last as long as you keep your mortgage active. The term cover ends as soon as you finish paying off the mortgage. 

Moreover, the left balance of your mortgage is the death benefit of mortgage life insurance. Many mortgage life insurance policies do not require a medical test.

Is Anything Left?

In a nutshell, it’s an emerging need to go for parents’ life insurance as life is full of uncertainties, and there should be someone after them who can look after your family or loved ones. 

You can opt for any parents life insurance from the types mentioned above of life insurance. 

So, Chop-chop! Buy a policy today and cover your family with a parents life insurance shell.