Can I Buy Life Insurance on my Mother?

Son Wondering Can I Buy Life Insurance on my Mother

You may be wondering, “Can I buy life insurance on my mother, or will she need to purchase the policy herself?” You may be asking this question because you are worried about what would happen if your mother will pass away without life insurance.  Who would pay for her burial or cremation in the first place?

Can I buy life insurance on my mother? The answer is YES, you can. You just need an insurable interest and her approval. If you would suffer financially should your mother die, then you can get life insurance on her.

There are many reasons to get life insurance coverage on the life of your mother. Getting life insurance on your mother can help relieve the stress when she passes. The life insurance policy payout can help pay for funeral expenses and take care of final expenses like medical bills or credit card bills.

If you are considering buying life insurance for your mother, but you are not sure how to do it, we can help. We can work with you to determine the best plan for your mom. We work with the top-rated insurance companies, and we can locate the one that fits your needs and budget.

WHY DO I NEED TO BUY LIFE INSURANCE ON MY MOTHER?

There are many reasons why you may need to buy life insurance for your mother; this may be true even if you are independent and no longer relying on her for financial support. The primary reason children purchase this insurance on parents is to protect themselves financially when a parent dies.

You may need to purchase life insurance for your parents, brother or sister,  to cover the cost of a funeral and other final expenses. Today, the average cost of a funeral is approximately $10,000 when you add the cost of burial, memorial service and plot. Having a life insurance policy on your mom can help ease this financial burden.

Your mother may still be liable for a credit card debt, auto loans, and other financial obligations. With these in mind, taking life insurance on your mom can make a sound financial sense to ensure that any unpaid debts can be paid off.

If your mom owns a real estate and still has a mortgage, you need to purchase a life insurance policy to pay off the mortgage in case of her passing or you may be stuck paying her mortgage. Another reason is to pay estate taxes. If your parents own real estate, you’ll have to pay taxes on your parent’s estate’s value, getting life insurance can help you pay for them.

Buying life insurance on your mother can be affordable, depending on the type and amount of coverage, and the insurance company you choose to buy a policy.  So, whether you are worried about covering funeral expenses, paying off your mother’s debt, or other financial obligations, we can help you started on the plan that’s right for your mom.

WHAT ARE THE REQUIREMENTS TO GET LIFE INSURANCE ON MY MOTHER?

Buying a life insurance policy on your mother is possible as long as you have insurable interest and consent.

Insurable interest

It is illegal for life insurance companies to sell insurance policies on people without insurable interest. Insurable interest is required by law to ensure you will not gain unlawfully on the death of the insured.

To obtain insurance on your mother, being a son or daughter is not enough; you must prove that you have an insurable interest. It means you must show that you will suffer financial loss from your mother’s death.

Consent

You’ll need your mother’s consent to take out an insurance policy. It’s illegal and fraudulent to purchase a policy without her knowledge. The insurance company will also require a medical exam or health questionnaire. Aside from these, she will also need to read the policy and sign a form agreeing to the terms. So, it’s impossible for you to get a plan without her knowledge and consent.

WHICH TYPE OF LIFE INSURANCE IS BEST FOR MY MOTHER?

When considering life insurance for your mom, there are different types of life insurance policies to consider. The primary types of life insurance in the market are the term and permanent.

Term Life Insurance

Term life insurance is only available for a certain amount of time, such as 10, 15, 20, 25 or 30 years depending on the insurance carrier and the age of the applicant. This type of policy is called term because the coverage is terminating or will expire at the end of the term.

Term life insurance provides pure death benefit protection only, and because of that, it is often the most affordable type of policy. It is a good option if your mom is in good health, but if she outlives the term length, this defeats the purpose of having coverage at all.

Term life insurance is not available to all ages. As a rule, you can only purchase term life insurance if your mom is less than 70 years old. If she is over 70, you may need to buy whole life insurance or guaranteed issue policy.

Whole Life Insurance

Whole life is the most simple form of permanent life insurance. It is because it provides a fixed death benefit for the insured, and the premium amount is locked in for the life of the policy. The premium will not increase, regardless of your mom’s advancing age, or even if she obtains a health condition after you purchase the insurance policy.

There is cash value on a whole life insurance policy that grows at a guaranteed rate of interest. This cash value can build up substantially over time. The reason for this is because it grows on a tax-deferred basis; this means there is no tax due on the gain until it is withdrawn. Some whole life policies even offer dividends, but these are not guaranteed.

Guaranteed Acceptance Whole Life

Guaranteed acceptance is a whole life policy that never expires. Your mom can have a policy for life. This type of policy does not require a medical exam or health questions to be approved.

Acceptance is guaranteed, and your mom can qualify regardless of her medical condition.

Guaranteed acceptance can be easy to get, but it has a graded death benefit limitation (the policy has a two-year waiting period).

This means that if your mom died during the waiting period, her beneficiaries would not receive the full death benefit. They will only get the return on premium plus 7% to 10% interest. The whole death benefit will only be given if she dies after the waiting period.

Whatever your mom’s age, over 60, or over 70 it is still possible to get life insurance on her. Insurance companies will look at their present health status and any past health issues she had. Of course, the older she is, the more money it will cost to obtain a life insurance policy.

HOW MUCH COVERAGE SHOULD I GET FOR MY MOTHER?

The amount of coverage you need will largely depend on the overall purpose of life insurance. Deciding on the amount of life insurance to purchase for your mom requires you to consider some important factors:

  • Debt
  • Mortgage
  • Funeral expenses
  • Other expenses like medical bills or hospice care

Let us illustrate:

Your mom is 70 years old and rents an apartment. She receives a modest social security payment. She does not have a debt. However, she does not save up money for final expenses. If you’re merely looking to have the funeral and final expenses covered, an insurance policy with a payout of around $15,000 to $20,000 may be sufficient for your needs.

On the other hand, if your mom is 65 and has a mortgage of $250,000 and she recently retired and received a pension and social security. Aside from the mortgage, she has a debt for her car, medical bills, and credit card debt. She does not have money in savings. Your mom provides childcare to your kids three days a week.

To know the amount of coverage you need for your mom, you need to add up all the amount of debts to be paid. In this case, you should purchase a $500,000 policy for her to pay all her debts, final expense and to provide for your future childcare needs.

You must purchase the appropriate amount of coverage for your mother’s present situation. Too much coverage can raise a red flag to the insurance carrier. Too little coverage won’t provide the kind of financial protection you need.

WHAT IF MY MOM IS NOT IN GOOD HEALTH?

If you are buying life insurance for an elderly parent, or if your mom has any adverse health condition that makes her high risk, she may be uninsurable for a medically underwritten policy. In this situation, there’s still an option available for her.

A guaranteed acceptance life insurance policy may be her best option in this situation. With this type of coverage, a medical examination is not required. You are also not required to answer health questions on the application. And because of this, she will qualify even if she has conditions such as cancer, or any major illness.

Guaranteed acceptance with no exam policy can be approved within just a few minutes as there is no health underwriting to contend with. This means that the life insurance for your mother could be in force almost immediately.

The only drawback to this type of policy is the two-year waiting period and the limited death benefit. You can only purchase a maximum amount of $50,000 depending on the insurance company.

HOW TO APPLY FOR LIFE INSURANCE ON MY MOTHER

Identify what type of life insurance policy you want for your mom. Then determine the coverage amount you need by adding your mom’s debt and other financial obligation with the funeral cost. Once you have decided on the kind of policy and the amount of coverage you need, you will need to get your mom’s permission to get her a life insurance policy.

Ask your mom about any medical conditions to see what kind of insurance policy she can qualify for. You can just call us and we can help you understand your options. Common questions asked on a life insurance application are:

  • Basic personal information
  • Health history
  • Prescription history
  • Income
  • Smoking status
  • Foreign travel frequency
  • Habits and hobbies
  • Family health history
  • Other life insurance in force and the amount of coverage

If you opt for a traditional life insurance policy, it will entail a medical exam. It typically takes about 30 minutes; the paramedical professional will either go to your mom’s place or other convenient location for her. The nurse will take a blood and urine sample. The carrier will test these samples to know more information regarding your mom’s health.

To obtain more details on your mom’s health, the underwriters may request medical records from your mom’s doctor or any medical specialist that she sees or both. Once the insurance company collected all the health information, the underwriters will decide your mom’s life insurance policy, as well as decide on the premium amount.

If you opt for a non-medical or guaranteed issue policy, your mom will skip the intrusive medical underwriting. You will typically get approval after the telephone interview.

IMPORTANT THING TO CONSIDER BEFORE BUYING LIFE INSURANCE ON YOUR MOTHER

There are four parties involved in the purchase of a life insurance policy:

  • The insured
  • The owner
  • The payor
  • The beneficiary

The insured – The insured is the person covered by the life insurance policy, her death will result in a death benefit payout. In this instance, it will be your mother.

The Owner – The policy owner holds the rights to the life insurance contract and has the right to make changes to the policy such as change beneficiary, transfer ownership, lowering death benefit, adding or deleting riders, and requesting a rating change for the insured.

If you will be the owner of your mom’s life insurance policy, the insurance company will require you to submit proof of insurable interest.

The payor – The payor is the person who will be making the premium payments. The payor is also considered the owner of the policy.

The beneficiary – the beneficiary is the person designated to receive the life insurance payout. You can be the beneficiary on your mom’s policy.

It’s crucial that your mom’s policy is set up appropriately. You can fall into a tax trap if your mom’s life insurance policy is not handled carefully. Life insurance payout is usually tax-free unless the insured, owner and beneficiary are three different people. This case is known as the Goodman Triangle.

The owner can be taxed on the life insurance payout if the insured, owner and beneficiary are three different people.

The Goodman Triangle can happen this way:

A daughter owns a life insurance policy on her mom. The owner named her son as the beneficiary. For tax purposes, the payout is viewed as a gift to her son, and it would be taxed accordingly. The daughter would be taxed on the gift she bestows on her son.

How to avoid the Goodman Triangle and the tax implication:

The Goodman Triangle can be avoided by making the two points of the triangle the same person. In the example above, if the daughter is both the owner and the beneficiary, then there is no Goodman Triangle.

Be careful when setting up your mom’s policy to avoid the Goodman triangle and the tax implication that goes with it. Don’t let the insured, owner and beneficiary be three different people.

HOW TO GET THE BEST RATES ON YOUR MOTHERS LIFE INSURANCE POLICY

Comparing rates from many different insurance carriers is the only way to make sure you get the most affordable and best rates on your mother’s life insurance policy.

Insurance rates can vary by hundreds of dollars per year from company to company, so it’s crucial to compare many quotes. Doing so will let you find the cheapest rates possible for your mother.

Work with an independent life insurance agency like Life Wealth Win who represents multiple carriers. We can provide you with multiple life insurance quotes in an instant by filling in the instant quote form on this page. This way you will receive the best policy at the most competitive price.

CONCLUSION

Need burial insurance? Instead of wasting hours talking to different agents answering the same questions over and over again, let us do the work for you to find affordable burial insurance.

Fill out the instant QUOTE FORM on this page and we will give you the best rates available for final expense life insurance.

Funeral Funds is an independent insurance agency that can shop your application to many companies available. This way you can be sure that you are going to get the best carrier that favors your age and health.

We work with the top-rated life insurance companies in the United States, many of which offer immediate coverage with the lowest rates.

If you need help finding burial life insurance, please don’t hesitate to contact us at (888) 862-9456.