Life Insurance for Your Grandparents, Should You Get Coverage?

life insurance for grandparents

Buying life insurance for grandparents can be a big decision. While grandparents can get the insurance coverage on their own, grandchildren or children themselves can buy life insurance to cover for their grandparents or parents respectively. The purpose of life insurance, in this case, is to guarantee financial protection to surviving dependents once the inevitable happens.

Life insurance is a general term used to define a contract between an insurer and a policyholder. The insurer agrees to pay a certain amount of money upon the death of the insured. In the case of grandparents, the insurer guarantees payment to a named beneficiary upon the death of the insured.

Life insurance companies require people to justify the need for purchasing life insurance. This is called insurable interest. In the case of insuring parents or grandparents, it is also required to get their consent. You cannot buy a life insurance policy for someone without them knowing about. Assuming they are a legal adult they will need to sign the application as the insured.

Requirements And Limitations To Life Insurance

While grandchildren can buy life insurance for grandparents, some requirements must be met. Such policies also tend to come with limits on the value of the initial policy. For starters, as mentioned above one must be ready to prove that they have an insurable interest and that the grandparents have close family ties.

An insurable interest, in this case, requires one to prove that they are dependent on their grandparents financially or will have to make up for the final expenses associated with their passing. Likewise, one must be able to show how the death of a grandparent would lead to a financial impact of some sort.

Similarly, if one is living with their grandparents who are paying a mortgage, they can get mortgage insurance to pay off, the home in case a grandparent dies.

However, if the grandparent does not work and does not contribute anything financially, then it is highly unlikely that a company will agree to life insurance coverage unless it is for final expenses or in some cases, leaving behind a legacy, which is plausible.

In addition, grandparents must be ready to provide some information. In addition to completing an application by answering health and life style questions they will also be required to undergo a medical exam as part of the application process.

There are also life insurance policies for grandparents that do not require a medical exam. The simplified life insurance policies come with limits on the maximum face value which is the death benefit of about $150,000. These policies come with both permanent and term life options.

While taking life insurance for grandparents, it is important to note that premiums will go up as the insured ages. For this reason, it is important to consider this fact in advance, prior to signing an agreement with an insurance company. Any excess premiums must justify any potential payoffs once the insured dies.

In case of a sick grandparent, struggling with a chronic condition, it may be difficult or just too expensive to get a life insurance policy. Insurance companies also tend to impose age limits on when they can no longer issue an insurance policy. Many won’t issue policies past age 80, some are up to age 85 and and there is at least company that will insure you up to age 90.

Types of Life Insurance Policies for Grandparents

There are a few types of products that you can get for your grandparent depending on their age, health, and needs. Here is a quick summary of them.

Term Insurance

Term insurance is the cheapest life insurance policies as they are designated to last a pre-set period. Coverage comes to an end on the expiry of the pre-set time, which can be 5, 10 or 20 years. By far, it is the least expensive of all the life insurance policies.

Given the time limits that come with these types of policies, it is important to buy term insurance when one has temporary objectives that can be met over a given period. It is also important to note that most insurance companies offer term insurance up to the age of 80, so that may be your cut off, even less in some cases.

Whole Life Insurance

A whole life insurance policy is ideal insurance coverage that does not have any time limits. Such policies do not expire, the same way term insurance plan does. One can buy this insurance coverage for their grandparents to enjoy protection for an unlimited period.

However, it is important to note that these policies tend to cost more than other life insurance policies. Similarly, they cost more as they provide the assurances of beneficiaries accomplishing their objectives.

Whole life insurance policies for grandparents would come in handy once they mature, by shielding those left behind from any living expenses that might come. This may include funeral bills as well as any underlying debts left behind by the deceased and medical bills. The payout can also come in handy in estate planning or from donating to family or charity.

Guaranteed Issue Life Insurance policy

Guaranteed issue life insurance is ideal insurance coverage for seniors above the age of 50 that cannot get approved for any other policy. These policies typically come with a two year waiting period. This means that if you were to pass away in the first 2 years the full death benefit would not be paid. Typically the premium you paid plus interest would be paid to the beneficiaries but that is it. After 2 years the full death benefit would be paid.

These policies help shield the family members and beneficiaries in case of scary uncertainties. This type of insurance caters for all things like medical bills in case of sickness to other costs that might come into being as a result of hospitalization.

Similarly, guaranteed life insurance is usually bought to pay off any burial expenses that might arise in case of death. Most of these plans only go up to $25,000 which is more than enough to pay for a funeral and often times extra final expenses.

By consenting to such policies, a grandparent should be able to protect their family from any debt by covering any final expenses. These policies also provide grandparents an opportunity to look out for their beloved ones for a given period when they are not there.

Again, these types of policies are better for those seniors that are not able to get traditional coverage due to severe health risks.

The Process of Buying life Insurance for Grandparents

Once you have decided on which type of life insurance is ideal for your grandparents, then, the process of getting coverage ideally should be pretty simple.

The first step in buying life insurance for grandparents is ensuring they are on board with such a policy in the first place. Consent is crucial to any insurance company agreeing to issue a policy. Once consent is granted, it is time to get all the relevant medical information. The more, the better.

With medical history, in hand speaking with an independent insurance agent should be the next cause of action. A reputable life insurance agent would come in handy in helping one navigate the murky waters of insurance without too many hassles.

Once you tell them your goals and provide the medical information, they should be able to compare offers from various insurance companies they represent. Independent agents relieve one the burden of having to visit all insurance companies to find the right deal. The agent will also come in handy in submitting an application to the carrier of choice.

Once an application is approved, one would be required to fill out the relevant documents pertaining to a life insurance agreement from an insurance company. A grandparent would then be required to complete a brief interview with the insurance company as a way of ensuring consent is granted. A voice signature from the insured would be more than enough to seal the deal.

Tips to Buying Life Insurance for Grandparents

While getting life insurance coverage, it is important to note that there are scenarios whereby taxation can come into play once a policy matures. To avoid the taxation burden, it is important to ensure that the person paying the premiums has control of the policy and is the one being’ insured.

If the insured and the person paying the premiums are two different people, then the beneficiary would have to pay some taxes on the final payout, as it is considered as a gift. When taking life insurance for your grandparents, make sure that both the owner and beneficiary are the same to avoid the taxation burden.

Work with an independent agent

While it is possible to get life insurance for grandparents, very few ever end up with the best insurance policy. By working with an experienced life insurance agent, one can rest assured that they will have a pool of some of the best deals to choose from, from dozens of insurance companies.

Independent agents specialize in matching their prospective clients with whichever companies that fit their needs. It is important to note that there is no cost in dealing with an independent agent. This is because insurance companies pay independent agents a commission, on bringing in new customers to them.

Health information 

If you are to end up with the best life insurance policy, then gathering all the relevant health information on the person being insured is vital. Grandparent’s health history is the single most important piece of information that determines the kind of coverage an insurance company would agree to.

Prior to visiting an insurance agent, make sure you have all the health information in place. If you do not have any information, there is no way an agent would be able to match your needs with various offers in the market.

While it is possible to get life insurance quotes using age and gender, such quotes would only be theoretical and may not pass through with most insurance companies.

Some of the key health information to provide to an insurance agent include past and present prescription medicines as well as past and present diagnosed conditions. One must also provide documents detailing major events such as heart attacks, strokes, or hospitalizations. In the case of tobacco and alcohol use, one must also detail the same.

Consider Your Budget

Getting life insurance can be financially draining, especially in the instance of rising premiums. For this reason, it is important to consider one’s budget. One should be able to cater for premiums for up to 12 months, without straining the current financial position.

Many people have failed with life insurance policies on trying to take out a big policy for their grandparents to the extent of defaulting on premium payments. For this reason, people need to consider their budget before signing up for any life insurance policy. Make sure it is something that you can afford sustainably.

Consent Is Key

It is impossible to buy life insurance for a third party without their consent. In this case, the grandparents must agree to the policy and be ready to share any information that an insurance company may require.

Consent is necessary even when one is buying a guaranteed life insurance coverage that does not require any background medical information. Getting consent should not be a problem especially if grandparents are not the ones who will be paying premiums

Avoid Guaranteed Life Insurance if Possible

While Guaranteed Life insurance comes with minimal requirements, it’s not the ideal policy to get. Instead this is a policy you only want to get as a last resort.

There is a two year waiting period before the full death benefit will be paid out. So if your policy starts today and you pass away before two years goes by typically only premiums that have been paid plus interest will go to the beneficiaries. The full death benefit will not be paid unless the policy was in force for at least two years. The one exception to this is if you were to die in an accident. If you pass away because of an accident the full death benefit will be paid out no matter when you pass away.

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The good news for you is we are senior life insurance experts. We specialize in getting coverage to anyone over the age of 50. We compare all the rates on the market and get you the lowest rate, at no extra cost to you. Let us do the work and find your grandparents the right type of life insurance. Run a quote on this page or call us today!