Can you get life insurance for your parents?
Yes, you can get life insurance for your parents as long as you have an 'insurable interest', which in insurance terms means that there is a reasonable need for you to have the insurance in place.
In this article, we'll explain how to get life insurance for your parents, which types of life insurance you should buy and how to get the best and cheapest life insurance in the market.
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Reasons for getting life insurance on your parents
A parent's death can give rise to a number of financial concerns that you may wish to pre-empt and address by buying life insurance that will pay a lump sum of money to fund them. Below are some common reasons to buy a life insurance for your parents but you may have your own specific reasons too.
- Funeral expenses - funeral costs can be upwards of £4,000 and there may be other final expenses to settle
- Inheritance tax - to pay the inheritance tax bill if your parents' estate exceeds the thresholds
- Bills and debts - to clear outstanding debts and bills after death if there are no assets to fund them or to avoid selling assets to fund them
- Financial loss - any financial loss due to personal or business commitments they had to you
- Medical bills - to settle any care home or other medical bills
What type of life insurance will cover your parents?
The type of life insurance you choose will depend on what the death benefit is needed for. If life insurance is needed to pay off a loan or mortgage, it will only be needed until it is repaid so a term life insurance policy is usually suitable. On the other hand, funeral expenses and inheritance tax bills will need to be funded whenever your parents die, so an Over-50s or Whole of life insurance policy could be more appropriate for their long-term needs. Your parents' age, health and willingness to attend a medical exam can also determine which types of life insurance will be most suitable.
Life insurance to cover your parents
| Reason for life insurance | Type of life insurance needed^ |
| Cover the cost of a funeral and settling bills | Funeral Plan or Over 50s life insurance |
| Pay an inheritance tax bill | Whole life insurance |
| Repay the balance of a loan or mortgage | Term life insurance |
^These are only suggestions for the type of life insurance that may suit your parents' needs
To understand different types of life insurance and their uses read our article, "Types of life insurance explained".
You should also consider whether your parents will need single life insurance or joint life insurance. If they have single life insurance policies, they will each pay out when the insured person dies. On the other hand, joint life insurance policies only pay on the first death that happens leaving no life insurance for the surviving parent.
How much will life insurance for your parents cost?
The cost of your parents' life insurance will be determined by how much money the life insurance policy will pay out if they die but it will also vary depending on your parents':
- Age - life insurance costs increase with age so older applicants pay more
- Health - health conditions can affect the cost of life insurance but selecting a fair insurer can minimise any increase to the cost of their life cover
- Smoking habits - smoker life insurance premiums are usually around double the cost of life insurance for non-smokers
- Lifestyle - participation in dangerous sports or hobbies as well as a high average alcohol consumption could push up the cost of life cover
In addition to the above factors, the cost of life insurance for your parents will be dependent on the type of life insurance that you choose. Some life insurance policies may look cheaper but can provide poor value for money because of the qualifying period or the payout amount. It is best to speak with a specialist life insurance broker* to work out which type of life insurance will suit your parents and provide good value for money.
How to get the best and cheapest life insurance on your parents
Worries about covering funeral expenses, bills and taxes when your parents die is quite normal and so is buying life insurance for your parents to gain some peace of mind. However, there are a lot of options to choose from - some of the life insurance companies that run targeted advertising for people later in life don't provide the best value products and services to suit them based on value for money and qualifying rules.
Speaking to a specialist life insurance broker* is the best way to discuss your circumstances, concerns and budget. They will search the market based on these factors as well as your parents' age and any health issues to return the best life insurance company, product and price. If you go ahead with the recommendation, you can receive up to £100 cashback as a Money to the Masses reader.
If a link has an * beside it this means that it is an affiliated link. If you go via the link, Money to the Masses may receive a small fee which helps keep Money to the Masses free to use. This link can be used if you do not wish to help Money to the Masses and do not wish to qualify for the cashback referred to in the article
