Life insurance for parents?

[Jason C]

Hi

Both my parents are 57 years old and have no life policy. A friend of mine mentioned that it may be possible for me to take out a life policy on their behalf.
Has anybody ever heard of this or taken out a policy for their parents?

 

[orka]

Do you mean for you as the beneficiary or for you to pay the premiums for their benefit should one of them die? If you're just paying the premiums for them to take out their own policy, there shouldn't be an issue (probably not enough to get anywhere near gift tax) - probably easiest for them to take out the policy and you give them the money. If you want to be the beneficiary, the life company will want to know why you need the policy - you will need to show you have an insurable interest in their lives (e.g. if they looked after your children for free).
Also, are you sure they need/want life insurance? Is it to cover loans they have outstanding? It will be pretty expensive to get long-term cover for them so you need to be sure it's necessary in the first place and don't buy too much.

 

[RS2K]

I cannot see how a son/daughter would have an insurable interest in his/her parents lives.

It's quite possible for them to insure themselves of course and pay the premiums. The policy could be assigned, or put in trust.

 

[liteweight]

We all had my parents insured!! They started the policies for us when we hit 16 and we paid. Perhaps it's old fashioned now but the idea was that we would incur expenses when they died, such as, loss of earnings etc.

 

[Lorrie]

My parents had a joint life insurance policy then my mother cancelled her side of it a few years ago before she was sick and insured my dad only. She died in Feb and we discussed it with dad. We (3 of us) are now paying his life insurance. Figured no point in him forking out for it when its of no benefit to him. Too much money had been paid into it for it to be cashed. It only worth about 1500 encashment.