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 want to buy 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; particularly if you are independent and not 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 pay for the funeral, burial and final expenses. $10,000 is the average cost of a funeral today this includes burial, memorial service costs, and plot. Having a burial insurance policy on your mom can help ease this financial burden.

Your mother may still incur credit card debt, auto loans, and other debts. With these in mind, taking life insurance on your mom can make a sound financial sense to pay off any unpaid debts.

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 provider 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 must 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?

Are you considering getting life insurance coverage for your mom? Here are the different types of life insurance policies to choose from.

Term Life Insurance

This is only available for a particular period of time, such as 10, 15, 20, 25 or 30 years depending on the applicants’ age and the insurance company. Term life is short for terminating or will expire when the term ends.

This policy only provides pure death benefit protection, it is often the most affordable type of policy. It is a good option if your mom is in better health, but if she outlives the term, the goal of getting life insurance to cover final expenses is defeated.

Term 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 simplest type of permanent life insurance because it has a fixed death benefit amount, and the premium amount is locked in for the life of the policy. The premium will not increase, despite your mom’s advancing age, or worsening medical condition after purchasing insurance coverage.

The whole life insurance policy has a cash value component. This cash value accrues interest and grows on a tax-deferred basis; the interest is not subject to tax until you withdraw it. Some companies offer dividends on whole life policies, but this is not guaranteed.

Guaranteed Acceptance Whole Life

Guaranteed acceptance is a whole life policy that never expires. Your mom can have coverage for her whole life. Guaranteed issue 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. You need to consider different factors when deciding on the amount of coverage to purchase for your mom:

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

Let us illustrate:

Your mother is 70 years old and lives in an apartment. She is receiving social security benefits. She doesn’t have a debt. However, she does not save any money for her 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 mother is 65 and has a mortgage of $250,000 and she just retired and received a pension and benefits from social security. Aside from the mortgage, she has a debt for her car, medical bills, and credit card debt. Your mom doesn’t have any savings. She takes care of 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 to cover her debts, final expense and to pay for your childcare needs in the future.

You must purchase a sufficient amount of insurance coverage for your mother depending on her present situation. Too little coverage won’t give financial protection you need. Too much coverage can raise a red flag to the insurance carrier.

WHAT IF MY MOM IS NOT IN GOOD HEALTH?

If you are purchasing a policy for an elderly parent, or if your mom has any significant medical condition that puts her in the high-risk category, she may not qualify for a fully underwritten policy. In this situation, there’s still an option available for her.

A guaranteed acceptance burial insurance policy could be her best option to get insurance coverage. Guaranteed acceptance policy does not require a medical exam. She is also not required to answer health questions on the application. She will qualify even if she has medical issues or any major illness.

Guaranteed acceptance with no exam policy can be approved within just a few minutes because there are no health underwriting. This means that the life insurance for your mother could be instantly in force.

The only drawback to guaranteed acceptance policy is the two-year waiting period and the limited death benefit. Depending on the company you apply, you can only purchase $2,000 to a maximum of $50,000.

HOW TO APPLY FOR LIFE INSURANCE ON MY MOTHER

Identify what type of life insurance you want for your mom. Then determine the coverage amount you need by adding your mom’s debt and other financial obligations with the funeral cost. After deciding on the kind of policy and the amount of coverage you need, you must 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
  • Frequency of foreign travel
  • Hobbies and occupation
  • Family health history
  • Other life insurance policies in force and the amount of coverage

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

To obtain more details on your mom’s health, the underwriters may ask for 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 company will decide on the type of plan for your mom, and the amount of premium.

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, 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 policy owner, the insurance company will require you to submit proof of insurable interest.

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

The beneficiary – the person designated to receive the death benefit payout. You can be the beneficiary of your mom’s policy.

It’s important to set up your mom’s policy appropriately. There’s a danger of getting into a tax trap if your mom’s life insurance is not set up properly. The death benefit payout is tax-free unless all the parties (insured, owner and beneficiary) involved in life insurance are different people. It’s called 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 happens this way:

A daughter bought a policy on her mom. The beneficiary is her son. If the insured died the payout will be given to the owner’s son. The IRS considers this as a gift to her son, the gift is subject to tax, thus the payout needs to be taxed.

Avoiding the Goodman Triangle and the tax implication:

You need to make the two parties to life insurance the same person, this is the best way of avoiding Goodman Triangle. In the previous example, if the policy owner and the beneficiary are the same there is no Goodman Triangle.

Be careful when you set up your mom’s policy to avoid the tax trap. Avoid making the insured, beneficiary and owner 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 Funeral Funds who have access to different life insurance companies. We can provide you with accurate quotes in an instant by filling in the instant quote form on this page.

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.