How to buy life insurance for your parents

Can I buy life insurance for my parents?

Yes, but there are a couple of things that you'll need to do.

• Get their consent. You can't buy life insurance for anyone without their knowledge; that includes your parents. You'll need to get their written consent when you buy a policy for them.
• Prove that you have an "insurable interest". To be able to get life insurance for your parents, you need to be able to show that their death would cause you to suffer financially. In other words, you need to show that there are debts and expenses you'd need to pay if they died.

How to buy a life insurance policy for your parents

• Calculate how much money you will need. You need to work out how much you'll need to pay off all their debts. This means you'll need to add up their debts, including any mortgages and loans, plus find out their assets and savings.
• Choose between term and whole life insurance. Term lasts a set period of time and so is almost always cheaper, while whole life insurance provides lifelong coverage. If you want to guarantee that their debts will be cleared by a policy, then whole life insurance may be a better option in this situation.
• Shop around. This is the part we've made simple. You can compare life insurance policies for seniors side by side here to get a clear sense of how brands stack up against one another.
• Select the beneficiaries. This is the person or persons who receive the payout. You need to get your parents' final say on the beneficiaries, though presumably it will be you.
• Apply. Once you've figured out all the above details, you can apply for a life insurance policy on your parents' behalf. Be sure to submit everything that the insurer asks for.

Can I still buy a policy for my parents if they're in poor health?

If your parents are in poor health then this is often referred to as a pre-existing condition. It certainly makes life insurance harder to buy, but not impossible. You have a few options:

• Coverage with specific exclusions for your conditions.This means if you make a claim because of your pre-existing conditions, you might not qualify for the benefits. But if you make a claim due to something else, you should be eligible.
• Coverage with waiting periods on your condition. Your policy might have a waiting period to cover pre-existing conditions. During this time, which can differ between policies, you won't be able to claim benefits for those conditions. Once the waiting period is over, your coverage for pre-existing conditions kicks in.
• Cover with higher premiums. Known as loading, these are extra fees insurers will put on your premium to cover the higher risk associated with a pre-existing condition. These can be quite high and can make your cover a lot more expensive.

If you’re finding it hard to get cover directly through a life insurer, then we’d suggest looking for cover via a broker or financial advisor, or via their superannuation.

Why consider taking out a life insurance policy for your parents?

There are lots of reasons why you should seriously consider taking out a life insurance policy for your folks. Here are just a few:

• Debt. Any debt that your parents have will be passed on to you when they die. This includes everything from car loan payments to credit card bills.
• Provides you and your parents with peace of mind. Your parents don't want to leave you with any financial burdens when they pass away, and you don't want to deal with it either. Life insurance provides peace of mind knowing that finances are the last thing you'll have to think about when the day comes.
• Paying for the funeral. Funerals can cost anywhere from around $4,000 to over $15,000 in Australia which is not cheap. A policy for your parents can cover that as an add on, so keep an eye out for it when you're shopping around.
• Inheritance. All parents want to give their kids a better life than they had. A life insurance policy is a nice way for them to ensure that they leave you with something.

FAQs

• Can I take out life insurance for my parents?

  Yes, but only with their consent.

• Can I get funeral insurance for my parents?

  Yes, most suppliers will allow you to take out funeral insurance for your parents. On occasion, some may only offer cover to your or your partner.

• What is the maximum age to get life insurance in Australia?

  It depends on the insurer you go with. The youngest maximum we’ve seen is around 49 yrs-old and the oldest we’ve seen is around 75 yrs-old.