Friday, June 14, 2013

Your Parents Need Life Insurance

You love family and your parents have loved you, cared for you and spent their hard earned money on you, the child. Now, you feel an obligation to be there for them. You feel an obligation to the responsibility that will come when, unfortunately, they will pass away and someone will need to pay for burial costs and final expenses. In many cases, that someone will be you, the child of these wonderful but not so well prepared parents. If life insurance is determined to be one of the needed financial components, the following tips will, hopefully, help you and your parents be better prepared when one of them passes away and the last thing you will want to deal with is how to raise money for their burial and final expenses.

Determine if your parents need life insurance - Before you turn to life insurance, talk to your parents about what they have done to take care of final expenses and burial cost. Maybe they have money securely put aside or they have made arrangements with a funeral home and, at least, most or all of their burial expenses will be taken care of. Do they have assets that they want to pass down to the children? Are these assets free of liabilities – such as a home with a mortgage or reverse mortgage? These loans may need to be paid off upon one or both parents' passing.

Start early - Your mother and or father is healthy or fairly healthy today. Do not wait. Get a life insurance plan while your parents are healthy. Elderly health can change fairly quickly. Particularly, if they are not so health conscious. The cost of getting a life insurance when someone is healthy can be dramatically lower than when they have health problems. Even worse, they may not qualify for any insurance if their health is very bad. For example, most insurance companies will not want to insure someone who has Alzheimer's and cannot make decisions for themselves, even if the child has a power of attorney. Also, the younger a person is, the lower the rates and the more plan types will be available.

Select the appropriate plan – There is no point in getting a very low rate 10 year term life insurance plan to cover a long term need. What is inexpensive today will quickly become very expensive tomorrow and may expire before it is ever used. Term is good for short term needs. For long term needs use whole life or universal life. If your need is very small then a whole life will do best. If your need is larger $50,000 to $100,000+ then a universal life will work well. If all you need to do is cover a mortgage loan, then a term life insurance or even a universal life plan with an added term rider may be most economical and best suited. Make sure you share your goals with the insurance company and/or agent. They should be able to guide you properly.

Shop around – Cost of life insurance can greatly vary from company to company and so can the underwriting process. Companies that offer simplified issue life insurance plans have a very similar underwriting process. With these plans, we would just recommend that you locate the cheapest rate with a reliable company (good AM Best Rating and customer service). With companies that offer full underwriting (exam required) look for the ones that are more senior oriented. They will usually offer some of the lowest quotes and tend to give you a better underwriting outcome. Bottom line; shop for multiple low rate quotes but don't just look at the quotes. Ask a lot of questions about the plans and the underwriting process.

One last piece of advice, no matter how great the life insurance rates you find are, if the process is too complicated, many senior parents will not want to bother with the process and do nothing. Make it as easy for your parents as possible. 

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