Parents are IMPORTANT! So if you’re looking for the best life insurance policy for parents you aren’t alone.
Sadly far too many people don’t buy life insurance when it’s cheap and easy. Hey in your 30’s it really is inexpensive. The older we get the closer to death so obviously underwriters penalize us. That’s why I encourage all of my clients to pull the trigger on a life insurance policy when they first start to think it’s necessary.
The longer you wait the more you’ll pay.
That being said, why would someone in their later years even think about life insurance coverage? Shouldn’t this be the point in time when their coverage is winding down?
Yes and NO! So let’s find out some more.
The Best Life Insurance Policy for Parents & Why I Care!
My name is James Heidebrecht and I’m the founder of Policy Architects. I’m a Dad, husband, and musician. After I had my son, life insurance coverage became an even more important issue in my life. Who doesn’t want to make sure their family is taken care of in the event of a tragedy?
Being a parent is a huge responsibility…
…and so is being a son or a daughter. Parents feed, clothe and house us until we are able to take on those responsibilities ourselves. So as they age we often return the favour. Some of us even have our aging moms and dads move in – family is important after all.
But what happens if they need some life insurance coverage and why the heck would elderly people need coverage anyway? Let’s take a look at the whys and wherefores and how to get life insurance for your parents if they need it.
A survey released Thursday commissioned by Royal Bank of Canada found that 96 per cent of parents were subsidizing children aged 18 to 35 and 48 per cent were still helping kids age 30 to 35. RBC raises the question of whether parents are helping their kids with money that should be going into their retirement saving, which is valid.
Reasons You Need the Best Life Insurance Policy for Parents & How to Get It
OK, James, I like your articles - but seriously are you trying to sell life insurance to my parents? Sounds a little fishy my friend! .
I could see how you might feel this way, but nothing could be further from the truth! Buying a life insurance policy for parents is something that you may actually have to consider at some point unless your parents planned ahead. Even if they planned ahead it still may be a perfect fit. So let's go through some of the best reasons right now:
Life insurance is a great tool! It provides people with a safety net to protect people they care about from the financial devastation that death can cause. For the most part, people assume life insurance coverage is for young families. While this is definitely true there are a lot of exceptions to this rule and finding the best life insurance policy for parents is definitely one.
So let’s check out the many reasons your parents may need coverage in their later years right now:
A Second or Third Career
People are living longer AND working harder. Retirement isn’t what it used to be. I have many clients who have decided to make the businesses they dreamed of reality later in life. When you have kids it can be tough to take chances so that government position with benefits looks pretty damned good when you’re raising your family. Hey, you even get paid time off.
That being said, when your children fly the coop everything changes. You no longer have all the responsibility you once had. So if you want to realize a career you never thought possible, this may be the time to do it. If you opt to launch a business because you’re an entrepreneurial spirit you have a lot of responsibilities. Maybe you have a loan, employ people, maintain a lease or have a partner. No matter how you slice and dice it chances are you have financial obligations.
A life insurance policy can protect your loves ones and business associates from damage if you die unexpectedly. This is a VERY good reason to take out a life insurance policy, in fact, many banks require it as collateral for a loan.
A Second Family
Divorce is common and sometimes people start a second family. If that’s the case, maybe your parents have younger children they want to take care of.
Often people who are involved in second marriages want to make sure all their children are acknowledged when they move on to the pearly gates and life insurance is a good way to adjust any inequity. This approach can also be used to protect a new wife or husband in case you pass away unexpectedly.
Everyone wants to pass on an inheritance to their family. It’s one of those things all of us dream of.
Life insurance is a terrific tool to achieve this goal. If you happen to have money, you can use a life insurance policy to take care of taxes, leave money to your favourite charity and/or preserve your wealth for the next generation.
Another great trick if you are looking for the best life insurance policy for parents is to encourage them to purchase a joint last to die policy to take care of any liabilities they might have. Once they purchase this policy the growth isn’t taxed and the payout goes to their beneficiaries tax-free too!
This is an excellent tool if you have a family cottage that you want to pass on to the kids. A medium sized cash value life insurance policy can take care of any capital gains tax due on the cottage. It’s nice to know a family tradition will continue when you’re long gone.
OK so the will has been drafted and you’re kids are taken care of, but life has really changed since then.
You have grandchildren now and they are growing up fast. You’d love to leave them something but you’re not sure where it’s going to come from. Maybe you want to help them get through university or just simply give them a bit of a head start. A life insurance policy is perfect for this.
You can purchase a small permanent policy that will give them a nice chunk of change to let them know you’re thinking of them. If you pay up the policy in a shorter period of time (ie. 8- 20 years), the total cost of the life insurance will be a lot lower. Also, you’ll buy more time for the cash in the policy to grow and compound. It could end up being quite a nice little nest egg. Thanks, Grandpa and Grandma!
Funerals are VERY expensive. I think this is one of the most underestimated costs people encounter.
If you don’t plan for your burial, the bill will be left to your family – and when you’re talking about $10 – $20K it can be a real financial setback. So if you’re looking for the best life insurance policy for parents you may want to buy a small permanent plan that will cover these funeral costs. For approximately $75 per month, a healthy 60-year-old male, non-smoker, can buy a $25,000 life insurance burial policy. Many carriers offer smaller amounts of coverage all the way down to $5000. After all, some protection is better than none.
Types of Life Insurance Available for Your Parents
So now that you know why your parents may need life insurance, let’s consider what sort of products they have at their disposal.
Of course, term life insurance is the best-known type of coverage. You pick out a period of time you need protection for, a dollar figure that works for your situation and you pay a premium that’s guaranteed to remain level for that term. That’s a great way to go and if you’re young it’s really cheap.
The problem is as you get older your term premiums are more expensive. It makes sense because you’re a much higher risk to insure as the likelihood of dying during your term rises. This is one of the reasons term insurance won’t necessarily work for your parents as they get into their late 60’s and 70’s. There’s a point where it becomes really costly and permanent insurance becomes more viable. Not to mention, you’re left with nothing if you survive your term (…and that should always be your goal). Short term coverage for 10 years or less may still work to cover a loan or something but you really have to do the math. Even then it depends on how old you are as specific insurance terms aren’t available beyond certain ages. For more about this, check out my post on term life insurance for senior citizens.
Which brings me to permanent insurance. This coverage lasts until the day you die, which means the premiums are substantially higher. However, if you’re looking to benefit a family member financially this is a good choice because as long as you’re paying your premium, they are guaranteed to receive a tax-free lump sum.
If your parents happen to have any medical conditions, a simplified-issue or no medical exam policy is the way to go. These policies are also an excellent way to cover funeral costs.
However, individuals who have health issues do have options for securing life insurance coverage. Life insurance with no medical exam can be a smart choice for those who might not otherwise qualify for coverage. It is important, though, to consider how these types of policies work, the strength of the insurance company offering coverage, the cost of coverage, and the length of time the coverage is in place before accepting a new policy.
Why You Should Contact Policy Architects If You're Looking for
the Best Life Insurance Policy for Parents!
So if you’re looking for the best life insurance policy for parents, my best advice is to give Policy Architects a call.
We have all the information you need. Every single case is very different so there’s no way for me to give generalized advice for seniors looking for life insurance coverage. It all depends on your financial situation, medical condition and the period of time and amount of coverage you need. These variables radically change the advice I’d give you.
One thing I’ll stress however is if you have debt, want to help your loved ones cover your funeral and/or financial obligations or simply would like to leave some cash to people you care about life insurance is an awesome tool. The key is to ALWAYS speak to an independent agent. There are tons of creative ways to address personal circumstances.
Whether you choose no exam life insurance for parents or permanent insurance – you want to use an independent agent. There’s no better way to get a better policy and we will be there to review your coverage years later. Remember life brings change. This also applies to your life insurance. Give us a call today we are here to help and will treat you like a client for life.