It is natural to want to protect and care for your parents. However, sometimes it can be challenging to juggle all-new care-giving and financial responsibilities while planning for the futures of your aging parents.
If you’re an adult caring for your old parents, getting final expense insurance for them can help create a sense of financial stability and give you peace of mind.
A final expense insurance can assuage worries about the future, allowing you and your parents to enjoy the present phase of your lives.
Read on to learn more about final expense insurance for parents, including how the policies work and how you can get a no-waiting period coverage for your parents, even when they are in their 80s.
Table of Contents
Can you get Final Expense Insurance for Aging Parents?
Yes, it is entirely possible to buy a final expense insurance policy for your parents. However, you MUST have their consent and insurable interest to be able to buy the policy on their behalf.
To be precise, your parents have to sign the application and answer health questions (depending on the coverage you are buying) before you can get coverage for them.
This means you must talk to them extensively about your plan to buy them a life insurance policy and have them agree. Discussing the life insurance upfront is vitally crucial as it helps you get an idea of their end-of-life wishes and understand whether they have other plans in place.
As an adult child, your parents are likely to list you as a beneficiary so that you can receive the death benefit when one or both passes away.
Final expense insurance death benefit is usually meant to cover costs associated with the insured’s end-of-life arrangements, easing the financial burden on loved ones. Getting coverage for your parents can keep you from having to shoulder a heavy financial burden when they die.
Notably, when it comes to getting life insurance for parents, having insurance interest is often apparent because your parents’ death would almost certainly affect your finances.
Understanding Final Expense Insurance Policies and How they Work.
At its core, final expense insurance is a permanent life insurance policy designed to cover funeral and other end-of-life expenses.
It is also known as burial insurance or funeral insurance and usually has a small face value, between $2,000 and $40,000.
However, considering that an average funeral costs between $7,000 and $12,000, the death benefit is often enough to cover end-of-life arrangements.
Because these policies are not intended to replace the insured’s income in the event of death, they are popular among seniors who want to save their loved ones from having to shoulder their end-of-life expenses.
Buying a final insurance policy for your parents can save you and your loved ones from the financial burden of paying for their funeral.
Interestingly, burial insurance policies are affordable, and depending on the policy, the proposed insured may not need to take a medical exam. Even better, health issues won’t preclude your parents from qualifying for coverage.
When you buy a policy for your parents, the coverage will last for a lifetime as long as you pay the premiums on time. Upon passing, the insurer will pay out a tax-free check to you and/or other listed beneficiaries so that you can cover their funeral and other final arrangements.
Even so, there are no restrictions as to how you can spend death benefits. You can use the money for anything from covering funeral costs and medical bills to settling debts and paying school fees.
Notably, no health questions policies are relatively expensive and often have a two-year waiting period. If the insured passes away within the grace period, the insurer only refunds the premiums plus a small annual interest, usually within 5% to 10%.
Whatever policy you buy for your parents, the premiums and death benefits won’t increase or decrease for whatever reason, including inflation.
How to Buy Funeral Insurance for Aging Parents.
Getting your parents’ coverage sounds simple in theory, but it can be an involving process.
You first need to talk with your parents and make them understand why they need a final expense insurance policy. Of course, if one of the parents is unwilling to partake in the application, it will be impossible to get coverage for them.
If you are considering buying a final expense insurance policy for your parents, here are steps to take out coverage on them:
Step 1: Get the parent’s consent.
It is only possible to take life insurance on someone else if they agree and are aware of your decision. For this reason, the first step to getting coverage for your parents is obtaining their permission. Otherwise, it could be considered insurance fraud.
Importantly, you not only need to get your parents’ consent verbally, but they will also need to sign the application.
Further, although your parents satisfy the insurable interest requirement, some life insurance providers may require you to provide proof. Having an insurable interest means that you will face financial difficulties when your parents pass away.
Step 2: Decipher your parents’ insurance needs.
Discussing life insurance can be difficult. However, the valuable protection it offers is worth it.
Before buying a final expense insurance policy for your parents, it is essential to understand their insurance needs.
For the most part, this means assessing the income goals, any debts, and liquid assets. If your parents have dependents, you will also need to factor in the long-term needs of those dependents.
A detailed analysis will offer insights into how much coverage you need to buy. At the bare minimum, you should buy a policy that’s enough to cover funeral costs, medical emergencies, hospitalization, and debts.
Step 3: Choose a life insurance policy and company.
Once you know how much coverage you need to take on your parents, you can proceed to buy a policy. Final expense insurance plans vary significantly in terms of price, underwriting, and waiting periods.
To find the best burial policy for your parents, it is imperative that you do your diligence and compare different policies side by side. Eventually, you will find a plan that aligns with your parents’ coverage needs.
When shopping for a final expense insurance policy, an independent agent can help you understand the features of individual policies, eventually helping you find the best, most affordable policy.
Step 4: Fill out the policy application.
Applying for a policy is very easy when you have the consent of your parents. Most life insurance providers allow you to apply and submit your application online. Depending on the plan you’re applying for, your parents may be required to take a medical exam.
Step 5: Get approved and start paying premiums.
After applying, the underwriter will review it and all required documents to see if your parents qualify for the applied plan. Once approved, you can start paying premiums. Remember that you will need to pay the premiums regularly to keep the coverage active.
Do your Parents Need Burial Insurance?
Your parents might think that they do not need a final expense insurance policy. However, if you would suffer financial difficulties in the event of their death, it is worthwhile taking the initiative to get coverage for them.
Here are some ways funeral insurance can ease a financial burden after a parent’s death:
- Covering End-of-Life Expenses:
Surviving family members are often responsible for shouldering expenses associated with the deceased’s funeral and other end-of-life arrangements.
With burial costing about $9,000 on average, burial insurance for parents can save you and your loved ones from the financial burden of covering your parents’ final expenses. A decent policy should be enough to cover a parent’s funeral, memorial services, and even family members’ travel expenses.
- Cover the Costs of End-of-Life Care:
It is common for seniors to accrue hospitalization during their final phase of life. Many whole life insurance policies have a cash value that your parents can borrow from when alive to cover medical costs and emergencies. Payouts from your parents’ policy can also be used to pay off medical bills and settle other debts.
- Early Benefits:
Many final expense insurance policies have living benefits that the insured can use when alive. If you buy your parents a policy with riders, the policy can pay out an early death benefit in the event of insured risks.
For instance, an accelerated death benefits rider allows the insured to redeem their death benefit if they suffer a terminal illness.
- Replacing Income:
Many seniors across the United States depend on pensions in their old days. If one of your parents was on a pension and passes away before the other, it can leave the surviving parent in a terrible state, particularly if the pension is terminated.
A payout from a final expense insurance policy can partly replace the lost pension benefits, helping eliminate financial challenges the survivor might face.
- Help the Parents leave a Legacy:
Final expense insurance payouts can be used for anything. After paying off end-of-life expenses, part of payouts from a parent’s policy can be used to cover grandchildren’s fees or can be donated to a charity, leaving a financial legacy. The payouts can also be used to cover estate taxes, saving your inheritance.
Choosing the right burial insurance policy for your parents.
Final expense insurance offers valuable protection and peace of mind in the event of death. And while all burial insurance policies are meant to cover end-of-life expenses, the plans vary significantly from one provider to another.
To help you get the right insurance provider and policy for your parents, here are factors to consider when shopping for final expense insurance policies.
- The company’s Financial wellness.
The primary reason for investing in a final expense insurance policy is to ensure the survivors are in good financial shape in the event of death.
For this reason, it is important to choose a financially stable insurance company. Thankfully, AM Best, a reputable rating agency, makes it easy to get an idea of insurers’ financial strength.
When choosing, you want to go with a provider with a rating of A++ through A-minus. Mutual of Omaha, Transamerica, Aetna, and State Farm are some of the reputable life insurance providers with superior financial strength you can bank on.
- Products Offered.
There is an array of life insurance plans for which your parents may qualify, depending on their age and health. Choices and affordability diminish with age and health status.
While many life insurance companies offer similar policies, some focus on final expense plans and may offer tailored policies.
When shopping, make sure to ask whether there are other available options. This is vitally important because most providers and agencies tend to market guaranteed issue whole life insurance policies more than other options.
If your parents can qualify for simplified issue whole life insurance policies, you can be sure to pay relatively cheaper premiums. Even better, simplified issue whole life insurance policies have no waiting period.
- Underwriting Considerations.
Final expense insurance policies usually have a lenient underwriting process that accepts many health conditions. Even so, how insurance providers price policies based on health risks can vary widely.
For this reason, don’t make the mistake of thinking your parents are uninsurable because one provider denied your application or restrict yourself to one carrier because they offered to cover your parents.
Many life insurance providers have plans for which they accept chronic conditions, including chronic obstructive pulmonary diseases, Alzheimer’s disease, AIDS, and heart failure.
An independent life insurance agent can help you evaluate different insurance carriers and match you with companies that will adequately cover your parents.
- Cost of Coverage.
The fact that most final expense insurance policies have level premiums doesn’t mean you choose a carrier without looking into the prices.
Before making the big decision, you want to do a proper analysis to ensure you are getting the best value. However, this doesn’t mean buying the cheapest policy. Instead, choose a reasonably and competitively priced policy without sacrificing the services.
The best value should also be served with kindness, compassion, and respect. Mutual of Omaha is one of the top final expense insurance providers known to offer competitively priced and customer-tailored burial insurance plans.
- Customer Satisfaction.
In the United States, there is no shortage of life insurance providers that have been in the business for more than a century.
While this can be an indicator that these carriers have been serving their customers satisfactorily, it is not always true. To get insights into how individual companies address customer concerns, check BBB ratings and choose an insurer with at least a B rating.
A critical element of customer satisfaction you need to check is the claim settlement ratio (CSR). When making the final decision, consider the best offer from a carrier with the highest CSR possible.
- Waiting period or no Waiting Period.
Most life insurance providers offer both waiting and no-waiting final expense insurance plans.
Depending on your parents’ health status at the time of application, they may qualify for a simplified issue whole life insurance policy or only guaranteed issue insurance policy.
Generally, guaranteed issues insurance policies are best suited for people with chronic health conditions and terminal diseases.
The biggest downside is that they have a waiting period, meaning the insurer won’t pay out the whole payout when the insured passes away within the waiting period.
On the other hand, simplified issues whole life insurance policies have a relatively rigorous underwriting process, usually involving exam tests. The biggest advantage is that they offer immediate coverage and have relatively lower premiums.
- Financial Situation.
How much coverage your parents need largely depends on their financial situation. That’s why it is important to assess their financial situation before taking coverage on them.
Ideally, you want to assess their current assets, liabilities, and income, if any. Having an idea of how much coverage your parents need will help you find a suitable carrier and a policy that best aligns with their needs.
Notably, along with understanding your parents’ coverage needs, you will want to figure out what you can afford. This is important because failing to pay premiums can lead to termination of your parents’ policy.
- Included lifetime Benefits.
Nowadays, life insurance providers have added unique features to their products to make them more desirable and functional. As a result, it is not uncommon to find final expense insurance policies with lifetime benefits.
With patience and research, you can find policies that include accident and disability benefit riders, terminal illness riders, income benefit riders, and other riders. While these features may increase the premiums by a few dollars, they are worth it in most cases.
An independent local life insurance agent can help you quickly find a suitable plan with these desirable features. The extra few dollars will pay off should your parents suffer a terminal illness or need special care during their final days.
- Policy Customization.
The best life insurance policy should have room for personalization, as insurance needs can change over time.
Although it is less likely for your aging parents’ insurance needs to change, getting a policy that allows for customization can keep you from buying a new policy for every significant event in your parents’ life.
When it comes to choosing burial insurance for parents, it boils down to their specific coverage needs. The best policy should not only protect against death but also critical diseases and disabilities.
A reputable independent local life insurance agent can help you find a reasonably proceed plan that suits your parents.
Best Final Expense Insurance for Parents.
There are several life insurance policies on the market, designed to suit diverse needs. The best choice for your parents largely depends on your parents’ age, drug use history, and health status.
Typically, as your parents get older, their health status deteriorates, leaving them with limited coverage options. The choices diminish further if they use drugs known to take a toll on someone’s health.
As for affordability, it also diminishes as the risk increases.
Now that you know why your parents need a final expense insurance policy, how to apply for one, and what to look for when shopping, here are available options from which you can choose.
Term Life Insurance.
As the name suggests, term life insurance policies provide coverage for a certain period, often between 5 and 30 years.
Although they offer substantial coverage, they only remain in force for the specified duration and can only pay out if the insured dies within the term.
Perhaps the most exciting thing about term life insurance policies is that they are far more affordable compared to whole life insurance plans.
If you want to get your parents a term life insurance policy, keep in mind that they have a rigorous underwriting process that often requires one to be in pristine health condition to qualify.
Even so, it can be a great option if your parents have dependents because it has a large face value, enough to replace the deceased’s income.
Interestingly, some life insurance providers allow policyholders to convert their term insurance policies to whole-life coverage.
The biggest downside of term life insurance policies is that they won’t pay out if the insured lives longer than the coverage term.
Whole Life Insurance.
As the name suggests, this is a type of permanent life insurance suitable for parents who want to be covered no matter how long they live. The policies can build a cash value that your parents can redeem while they are still alive.
Because whole-life insurance policies pay out immediately after the death of the insured, they can be ideal for covering funeral costs and other end-of-life arrangements.
If you are considering taking out whole life insurance coverage on your parents, there are a host of companies offering these plans at competitive prices. Best of all, some providers allow seniors as old as 85 to buy policies. Working with a knowledgeable agent will help you land better deals.
Guaranteed issue life Insurance
Guaranteed-issue life insurance is a type of life insurance that doesn’t require a medical exam to be approved; insurance providers accept virtually every applicant.
It can be an ideal option for a parent who can’t qualify for traditional life insurance due to health issues. The downside of this policy is that it is very expensive compared to other policies.
The death benefits earned from a guaranteed issue life insurance policy are usually meager and might never be enough to cover all the burial costs.
In most life insurance companies, a guaranteed issue life insurance death benefit ranges between $10,000 and $25,000, which is lower than the anticipated burial cost.
Another disadvantage of this policy is that benefits are only paid on time if the insured death is caused by accident. Otherwise, if the insured dies from anything other than an accident, there is a waiting period of one to two years.
After this period, the beneficiary can get the total payout amount from the guaranteed life insurance policy.
Ideally, a final expense or burial insurance can pay your parent’s burial costs and other unpaid medical bills. Debts like mortgages can also be paid by life insurance policies.
However, the whole life insurance policy offers a specified payout amount to the beneficiary. The beneficiary decides what to do with this amount, even if it is not related to the burial costs. In most cases, the amount is meant to benefit the dependents of the deceased as they plan how to find a better source of income.
How much does Burial Insurance for Parents Cost?
There is a lot that goes into the cost of life insurance policies, with age and health being the leading factors.
That said, for a $10,000 death payout, you can expect final expense insurance for parents to cost about $50 to $200 per month, depending on their age at the time of application.
How much you will depend on the age, gender, health, cigarette use, and desired level of death benefit coverage of your parents.
The older your parents are at the time of application, the higher the premiums will be. If your parents use tobacco, carriers consider them a higher risk, and the price is going to be higher.
Another very crucial aspect of determining the price of a life insurance policy is age. Seniors aged 70 pay about double the premiums compared to those in their 60s.
When young, it is the responsibility of parents to take care of their children. However, when they get old, it almost obviously becomes the responsibility of the children to take care of the parents.
One way to show care for parents is by buying them a life insurance policy. While it is possible to get life insurance coverage for parents, it is always important to find out the best insurance policy and the best company to sell you that policy.
You should also consider the financial status of your parents and your ability to pay premiums, among other essential factors. This post is meant to help you correctly choose the best life insurance cover for your parents.