Jan. 9, 2007

How do I get life insurance for my aging parents?

Tim, Arkansas

Dear Tim,

The least expensive way for your parents to buy life insurance (if they are in good health for their ages) would be to go through the normal life insurance application process. Contact an independent life insurance agent or use a life insurance quoting Web site to find life insurers that will not disqualify your parents based on their ages.

If that proves difficult, or if your parents have medical conditions that preclude getting coverage, you may want to consider a "guaranteed issue" term life insurance policy. Guaranteed issue coverage requires no medical exam, asks no medical questions, and insures anyone who comes along. For this reason, guaranteed issue policies are riskier for the insurer than those with medical exams, and are thus more expensive than regular term insurance policies, especially for the elderly.

Another option would be a "simplified issue" or "quick issue" policy. Like guaranteed issue policies, simplified or quick issue policies do not require medical exams, but unlike guaranteed issue policies they do require you to answer questions about your health and medical history. Because these policies give insurers more medical information, they tend to be cheaper than guaranteed issue policies (though still more expensive than traditional life insurance).

If you are only looking to cover final expenses, such as funeral costs, check into funeral insurance bought through the funeral home of their choice. Funeral insurance policies are small face value policies (usually a few thousand dollars) that cover funeral expenses. The death benefit is often paid directly to the funeral home, not family members, so there's no potential for family arguments over the money.

Be careful, though, if you decide to go this route. Some policies require you to pay the premium in a lump sum that might be nearly the amount covered by the policy. Others allow premium payments to be spread out over three, five, or 10 years, ultimately adding up to more than the policy's face value. Tips for buying pre-need and final expense insurance can help you sort out the details.

Back to the Forum

Disclaimer: We are journalists, not financial planners or insurance brokers. Nothing we say should be interpreted as a recommendation to buy or sell any insurance product, or to provide other financial or legal advice.