What Is Life Insurance?
Life insurance is a protective financial product intended to provide monetary support to your loved ones if you were to pass away. A life insurance policy’s lump-sum benefit can help your children and spouse cover expenses like the mortgage on the family home, tuition costs, shared debt that you leave behind, or even just replace your lost income.
Life insurance can be temporary and last a specific number of years (term coverage) or be permanent and last the rest of your life.
Who Needs To Get Life Insurance?
In short, life insurance should be purchased by anyone who is relied upon for support, financial or otherwise. If your death would result in financial hardship—either due to lost income, lost services (like childcare), the burden of shared debt, etc.—you should consider buying life insurance coverage to protect those you care about. Parents most often fall into this must-buy category.
Life insurance isn’t for everyone, though. If you have significant savings, no debt, no dependents (including children, a spouse, aging parents, or other loved ones), you may not need to buy a policy.
Should I Buy Universal Life Insurance?
Universal life insurance is a policy intended to last most, if not the rest, of your life, and it accumulates cash value over time. This cash value can act as an investment as well as a source of liquidity if needed later in life.
Depending on the type of universal life insurance you buy, though (guaranteed, indexed, or variable), it might be a risky venture. These types of policies also involve annual fees on the invested funds, as well, which can eat into your growth.
For most investors, putting funds in a mutual fund (or other investment) outside of a life insurance policy is the wiser move. However, if you are looking for an investment vehicle that offers you a hands-off way to both grow your assets and protect your loved ones, it might be a fit.
Can I Buy Life Insurance for My Parents?
Yes, you can buy life insurance for your parents, or any other consenting adult. This policy can be used to cover things like final expenses, medical bills, or even estate taxes after they pass.
In order to purchase a life insurance policy on your parent(s), you’ll need their consent as well as the ability to prove your own insurable interest (meaning you would be financially impacted by their death). You can expect that the cost of this policy—like any other life insurance product—will depend on the level and type of coverage, as well as your parents’ age and health. A medical exam might also be required, depending on the policy you choose.
What Does Life Insurance for Parents Cost?
The cost of life insurance varies according to a few factors, such as your age, the amount of coverage you buy, and the type of policy you choose. Your premiums can also be affected by your health, family medical history, and even your location.
The earlier it’s purchased, the more affordable life insurance coverage can be for parents. Based on our research, we have found that young parents in their early 30s can buy $500,000 in life insurance for around $13 per month, for a 30-year term policy. Buying permanent coverage—such as whole or universal life—can be significantly more expensive, however.
How We Chose the Best Life Insurance for Parents
In order to choose the best life insurance for parents, we compared the policies and services offered by more than 20 different carriers. This included looking at the things that matter most to parents, such as price and policy options.
We considered factors such as availability, consumer reviews, industry ratings, and customer service. We also compared how easy (and quick) it was to shop for, quote out, and purchase a policy through each carrier. It was important to choose companies that offered parents different options of life insurance types for a reasonable cost.
Source: Google | Insurance News