Reader’s Question:

Both my mom and dad are in their late 50s and somehow we never really had stable finances until all of us graduated and got our own jobs. It’s just now that we found out that they don’t have any life insurance to cover their retirement. Most friends recommend term life insurance for parents but I don’t have any idea about it.  Is it really the best choice to consider when getting life insurance for parents of such age? Usually, how much does it a term life insurance cost?

Zoe

Miami, Florida

Buying life insurance for parents is never a pleasant experience with such thought that you are preparing for financial security once one of them dies. It is, however, a necessary action to take to make sure that your parents have policy that would help you alleviate any worries when the time comes.  It is true that most people prefer term life insurance for parents who are in their 50s and older. It usually costs less compare to other types of life insurance. With this age range, most insurance companies are strict and won’t approve insurance coverage longer than 20 years whereas in term life insurance, you could indicate specific time (5,10,20 years) of policy to outlast your parent’s projected life span. You should take note though that term life insurance for elderly persons are quite expensive and offer lesser years compared to those offered to younger individuals. The policy usually doesn’t offer any equity so you get what you pay for. If your parents outlast the specified time of their policy, they won’t get any money back. Also, make sure to select a policy that is renewable, so you can opt to renew their coverage once such coverage expires.

Make sure to ask the necessary questions when buying term life insurance for your parents. Talk with your parents about any other financial obligations and debts that they may leave behind. You have to consider the overall purpose of the life insurance before purchasing one. A $10,000 insurance policy is usually enough to cover burial costs, but if there are other obligations, you need to calculate for the amount enough to compensate for in terms of future medical obligations, unpaid loans and mortgages and other costs. This insurance should be enough to secure both you and your parents from any financial loss in the event of their death.