Death is a natural phenomenon. It is inevitable and unavoidable. It comes as an even greater shock when it is unexpected. Parents are the closest and most loved persons for an individual. Their expected death is not only extremely overwhelming but shatters us. Having a life insurance for them not only gives you a financial aid when someone dies unexpectedly but also provides a way to protect the remaining family. It is very unsure if you will be able to cover for your parents’ debts or pay for their medical treatment in case they fall sick. That is when Life Insurance comes to rescue. It is a very goof option for someone who is looking for a long term but steady investment in case of someone’s death. Apart from providing financial protection and stability, it also helps you to grow. But picking an appropriate life insurance policy is not easy. You need to analyse your needs, financial position and then evaluate the pros and cons of available option and thence make a choice.
In order to help you through this phase, here is a ‘know how’ about buying a life insurance policy for your parents.
Buying life insurance for your parents can be a tough task but it is possible. It is almost as same as buying it for your own self but there exist a few differences. Moreover, you can also buy insurance for someone you are not even blood related. How? Insurable Interest is the answer.
Insurable interest is nothing but the surety. It is a kind of proof that if your parents die you affirm to suffer some financial loss. This is important so that no one takes advantage of someone else’s death or expect an early death. Family members do not have any problem while giving the insurable interest, be it if you will be paying for your parents’ debt or their medical expenses etc.
After giving the insurable interest proof, the amount for the coverage needs to be determined. The amount should be moderate, neither too much nor too less. Too much amount would create problems with the company and too less would not be able to fulfil your financial needs.
Buying a Life Insurance policy for your Parents
As mentioned above, buying a life insurance policy is not a tough task. It is just like buying an insurance to cover yourself. But in a market flooded with insurance providers and agents, it is important to consider a few things to determine the right policy and provider according to your situation. Few things to consider are –
- Make sure your parents agree on getting a life insurance policy. Before making any choice, look for their consent. Do not proceed without their consent.
- After getting the consent from your parents, next step is to provide insurable interest. Insurable interest is important as it states that you will be standing the financial losses in case of their death.
- Determining the amount of coverage is very important. This depends on you and your parents’ current financial situation. You might feel the need to consult a financial advisor.
- Next step is deciding onto the type of insurance you want among the three – Term, whole and universal. To have the best results, know your situation and then make the choice.
- Eventually you will be the owner and beneficiary of your parents’ But this is not always true. Decide on who will be the in charge and beneficiary after their death.
- Generally, the owner is the one who makes the payment. Depending on your situation, decide with your parents who is going to make the payments of the policy.
Why Life Insurance Policy for your Parents?
There are plenty of reasons to get a life insurance policy for your parents. Even though, if you don’t believe the policies to provide you financial support, these policies nonetheless, provide financial protection which you might not find anywhere else.
- Death expenses – Living is expensive, so is death! Everyone knows funerals cost more than anything. Life insurance also helps you cover those expenses so that you don’t have to pay from your own pocket and burn a hole in them. Some companies also offer some add on options to cover such expenses.
- Life insurance covers everything from declining health or routine medical costs.
- Any outstanding debts, mortgage payments, credit card bills etc, you will be held responsible after their death. Life insurance policies provide help to pay them.
- If you rely on your parents’ income then life insurance is a good news for you. Life insurance payout can support your family income to keep you financially stable even after your parent’s death.
- If you are going to inherent the property, you are bound to pay the estate taxes after your parent dies. Life insurance helps you by reducing the burden of taxes.
- People often plan to get an insurance policy for their parents if they are planning to leave inheritance or legacy for them. Be it cash, retirement funds or property, life insurance provides substantial sum of money to the beneficiaries.
- If your parents love charity and would rather donate than to give it to you, you can do so by life insurance. Such donations are free from tax as well.
Having a life insurance is very important in today’s uncertain world. Due to varied reasons, the life span is decreasing and people are getting fatal diseases. Having yourself covered is not even beneficial for yourself while you are alive but also provides a financial support to your family even after you are gone.