Lie Insurance: Protecting Parents' Legacy

It is possible to take out life insurance on your parents, but you will need their consent and signature. You will also need to prove that you would be financially impacted by their death, which is known as insurable interest. This could be because you rely on their financial support, or because you would have to pay their debts or mortgage after they pass away. The process for insuring the life of someone else is generally the same whether it's your mother, father, or another family member.

Getting consent from your parents

Be Responsible

Before asking for consent, it's important to show your parents that you are responsible and can be trusted. This means doing your chores without being asked, helping with siblings and pets, and being active in your community. Demonstrate your conscientiousness by taking the initiative to help others, such as raking leaves for an elderly neighbour or visiting a sick friend in hospital.

Tell the Truth

Honesty is key to building trust with your parents. Make sure you have a track record of being truthful before asking for their consent. If you do make a mistake, own up to it and apologise. It may take time to rebuild trust if you've been caught lying, so be patient and consistently demonstrate your honesty.

Provide Information

When asking for consent, give your parents specific details about the activity or event. Let them know who will be there, what it is, where and when it's happening, how you'll get there, and why you want to go. Be patient and polite when answering their questions, and give them time to think about your request.

Anticipate Concerns

Think ahead about any concerns your parents might have and try to address them proactively. For example, if they worry about you getting home on time, suggest using a ride-sharing app to ensure you're home by curfew.

Respect Their Decision

If your parents say yes, make sure you stick to any conditions they set, such as agreeing to be home by a certain time. If they say no, ask questions to understand their reasons and see if there's an alternative they would agree to. Remember that sneaking around is not the answer and will only break their trust.

Follow Through

If your parents give you permission, it's important to hold up your end of the bargain. Do what you said you would do, when you said you would do it. This will help build their trust in you and increase the chances of them saying yes to your requests in the future.

Proving insurable interest

To prove insurable interest, the beneficiary-owner (the person, trust, or business that will receive the insurance payout) must demonstrate that they would be financially impacted by the insured person's death. This could be because they rely on the insured person's income, or because they would become responsible for the insured person's debts, such as a mortgage or medical bills. Children generally have an insurable interest in their parents, and parents in their children.

Insurable interest is a legal requirement to prevent people from taking out policies on those they have no connection to and profiting from their deaths. It also ensures that the value of the policy is reasonably close to the financial loss that will be incurred.

To prove insurable interest, the insurer will likely request identification from the involved parties and conduct a phone interview to inquire about the nature of the relationship and the insurable interest.

Choosing the right policy

When choosing a life insurance policy for your parents, there are several factors to consider. Firstly, you must prove that you have an "insurable interest", meaning that you would suffer financial hardship in the event of their death. This could include funeral costs, end-of-life medical bills, or any debts that you would be responsible for paying off.

The next step is to get consent from your parents and ensure they are comfortable with the idea. This conversation can be difficult, but it is important to have their agreement and signature on the application. You will also need some of their personal information, such as their Social Security number, and they may need to take a medical exam.

Then, you can start shopping around for a suitable policy. The type of policy you choose will depend on your parents' age and health, as well as the specific needs of your family. There are several types of life insurance policies available, including term life insurance, whole life insurance, and final expense life insurance. Term life insurance covers a set period, often between 5 and 30 years, and is generally more affordable. Whole life insurance, on the other hand, never expires as long as the premiums are paid and can build cash value over time, but it tends to be more expensive. Final expense life insurance is specifically designed to cover end-of-life costs, such as funeral expenses and medical bills.

When deciding on the coverage amount, consider your parents' end-of-life needs, any debts they may have, and the monthly expenses that will need to be covered after their passing. It's important to involve your parents and other family members in these discussions to ensure that everyone is on the same page.

Finally, decide who will own and pay for the policy. The policy owner does not have to be the one who pays the premiums, and the insured person can also own the policy. As long as you are listed as the beneficiary, you will receive the benefits when they pass away.

Filling out an application

The next step is to determine the type of life insurance policy that best suits your needs. Common options include term life insurance, which offers coverage for a finite period, and whole life insurance, which remains in force as long as premiums are paid and often builds cash value. Other types of policies include final expense insurance, which covers end-of-life costs, and universal life insurance, which is another form of permanent coverage.

When filling out the application, you will need to demonstrate "insurable interest," which means proving that you would suffer financial hardship due to your parent's death. This could include financial obligations such as funeral costs, medical bills, outstanding debts, or a mortgage. It's important to note that you must be honest during the application process and provide accurate information. Any misrepresentation or forgery could result in legal consequences and the denial of the insurance claim.

Once the application is complete, you will need to wait for approval from the insurance company. If approved, you will be required to pay regular premiums to keep the policy active. It's important to carefully review the terms and conditions of the policy and understand the coverage, benefits, and any exclusions or limitations.

Getting approved and paying premiums

Getting Approved

To get approved for life insurance for your parents, you will need to prove that you have an "insurable interest". This means demonstrating that you would suffer financially from their death. For example, if you rely on their financial support, or if you would inherit their mortgage or other debts.

You will also need to get your parents' consent and have them sign the application. They will need to be legally competent to provide such consent. During the application, you will need to provide their Social Security number, name, and address, and they will likely have to fill out a health questionnaire. Depending on the insurance company and the type of policy, your parents may also need to take a medical exam.

Paying Premiums

Once the insurance company approves the plan, you will begin paying regular premiums to keep the policy active. The cost of the premiums will depend on the age and health of the insured person, the type of policy, and the death benefit amount. The older and less healthy your parents are, the higher the cost will be.

Term life insurance is typically less expensive than whole life insurance, as it only covers a set period, whereas whole life insurance never expires as long as the premiums are paid. Final expense life insurance is another option specifically designed to cover end-of-life costs.

Frequently asked questions