Buying life insurance for your parents

If your parents have cosigned a loan or credit card with you, provide critical childcare, or support you financially, a life insurance policy can protect you and your loved ones when your parents pass away. Life insurance can also help your elderly parents if they haven’t put aside money for end-of-life costs like funeral expenses.

Buying a life insurance policy for your parents can seem like an appealing way to fully prepare for life’s eventualities. But buying life insurance for someone else is complicated, and in most cases, it makes more sense for your parents to purchase their own coverage and name you as the beneficiary.

Can you buy life insurance for your parents?

Yes, you can purchase life insurance for your parents, but it can be difficult to take out a life insurance policy on someone other than yourself, even if that person is related to you.

When you buy life insurance for yourself, you are both the policyholder and the person whose life is insured by the policy. If the policyholder and the insured are two different people, the policyholder has to prove they have insurable interest, meaning that they'll suffer financially if the insured dies.

This is hard to prove if you’re an adult child buying a policy for a parent and is rarely approved by insurers. You also cannot apply for life insurance for another person without that person’s consent, because they need to sign the policy contract and participate in the underwriting process.

You’re much more likely to secure life insurance coverage for your parent if you help them apply for a policy that they will own with you as the beneficiary. You can pay the premiums even if your parent owns the policy.

What type of life insurance should you get for your parents?

The right life insurance policy for your parents depends on their needs. Term life and whole life insurance policies are difficult to buy on someone else’s behalf, but final expense life insurance is a good option if you know you’ll be the one purchasing the policy and you’re only looking for a small benefit amount.

• Term life insurance is the best choice if a parent's death would lead to a substantial financial loss, loss of household support (for example, childcare), or if you would have to take on their debts. Your parents will need to apply for this type of policy themselves.

• Whole life insurance isn't a cost-effective choice for most people, but if your parents want to cover estate taxes or have lifelong dependents, it may make sense. They will have to apply for a policy on their own.

• Final expense insurance can be a good fit if your parents have medical conditions that make it hard to qualify for term or whole life insurance. But, coverage amounts are low and premiums are high compared to other policies.

→ Learn more about buying life insurance for seniors

How to buy life insurance for your parents

The first step to buying life insurance for your parents is to get their consent. You can't buy a policy without them — you'd be committing fraud — since they need to answer application questions and participate in a medical exam.

If your parents have advanced dementia or Alzheimer’s, reach out to a licensed life insurance agent before proceeding.

Once you have their consent, getting a policy is relatively straightforward. You'll get quotes, then your parents will go through the application and approval process and set up payments. Make sure you're named as a beneficiary on both policies.

→ Learn more about buying life insurance

Alternatives to buying life insurance for your parents

If you’re worried about affording burial costs or other final expenses for your parents, you have a few other options:

• Encourage them to get their own life insurance and name you as the beneficiary.

• Put aside money for end-of-life expenses for your parents, or encourage them to set up an account for this purpose and pay into it themselves.

• Pre-pay for funeral costs through a funeral home.

Buying a life insurance policy that insures your parents can be difficult. But as long as they're open to applying for their own policies and naming you as a beneficiary, it's relatively simple to ensure you and your family are financially protected when your parents pass away.