We all know the importance of a life insurance policy for ourselves, but what about for our loved ones? Sure, life insurance policies exist in the first place in order to benefit your immediate family, but what about the family that exists outside of that immediate household bubble? Parents and grandparents need life insurance too, after all. What if they don't have a life insurance policy?
Thankfully, it is possible for grandchildren to purchase life insurance on their grandparents' behalf. While this is a helpful and immediate solution to the problem, it begs a few more questions: How do you buy life insurance for your grandparents, and what type of life insurance policy is best for your grandparents? This guide will walk you through the process and the different options available to help you make the best choice for you and your grandparents' needs.
To buy a life insurance policy for your grandparents, you need to get their consent and obtain their signature. Without these key things, no insurance company will help you take out life insurance on their behalf.
Once you have their consent and their endorsement, you'll need to gather documentation that proves your grandparents are close relatives to you and that you have a valid reason to have an insurable interest in them. One example of this is financial documentation that shows you are using (or plan to use) your own money to care for your grandparents when the going gets tough.
Of course, no life insurance company wants to allow a person to profit off of a death for no real reason. If you aren't an essential part of their lives and you do not have any sort of financial connection or obligation, then you might run into trouble trying to pursue life insurance for your grandparents. The same goes for if you try to take out a six-figure insurance policy when you aren't spending anywhere near that to care for them. There are always going to be limits to keep things well within reason.
Once you've made the decision to buy life insurance for your grandparents and have gathered the proper information and documentation, you then must consider the different insurance policies for grandparents and determine which one is the best fit for your unique situation. There are two main policies — life insurance and burial insurance — and many variations between the two, so it's important to know the differences before signing off on the application.
While you've almost certainly heard the term "life insurance" before, you might not know that there are three main types of life insurance to choose from (and, subsequently, for your grandparents to choose from). Take a look at each unique type below to learn the key distinctions between the three.
When we think of life insurance and the benefits that come with it, the policy type you're likely thinking of is whole life insurance. This type of life insurance lasts for the remainder of a person's life and is not restricted by a certain timeline. Whole life insurance policies have enough money to last for however long a person's life may be, and it does not lose any value as time goes on — as a matter of fact, it often accrues wealth by sitting and gathering interest over the decades. Whole life is more expensive than term life insurance but comes at a lower price tag than universal life.
Unlike whole life insurance, term life insurance restricts its benefits to a set timeline agreed upon signing. It could be 15 years, 20 years, even as much as 30 years, but no matter what that year ends up being, the benefits have to be claimed before the time is up. If not, then the life insurance policy expires. For this reason, term life insurance is the most affordable life insurance option of the three.
Similar to whole life insurance, universal life insurance is a much more flexible option compared to term life. However, universal life is even more comprehensive than whole life. While it comes with a much higher price tag, universal life insurance more than pays for itself by coming with plenty of benefits and acting as an investment for your portfolio as it accrues wealth over time.
While life insurance gets a lot of attention (and for a good reason), burial insurance is like life insurance's under-appreciated and underutilized friend. Instead of acting like a safety net for an entire life, burial insurance simply acts as a way to ensure that, when a person passes, their funeral and burial expenses will be taken care of.
This is where burial insurance differs from life insurance: this policy — sometimes referred to as a final expense policy — exists solely to cover the funeral, the burial, and any other expenses related to this very specific part of a person's end-of-life care.
While there are all kinds of different insurance providers for you to choose from, the bottom line is that each person's needs are unique and no two people will need exactly the same life insurance coverage for exactly the same expenses. Because each of us is unique, we need a unique policy to match that. The same goes for our grandparents: After living such a long and fulfilling life, it's important to choose the right life insurance policy from the right insurance company for them.
Here are a few life insurance companies who have been known to show excellent care and consideration when working with grandparents and their insurance needs.
Lincoln Financial: ideal for seniors with a long or complex medical history
MetLife: perfect for older individuals who are high risk and cannot take a medical exam
Nationwide: a great insurance provider with a variety of different policies and plans
If you still have questions about how to take out a life insurance policy for your grandparents, you should consider getting in touch with the insurance experts at PolicyScout. Our expertise and knowledge of the insurance industry are unparalleled, and we are positive in our ability to help further educate you on what the best insurance policies are and how you can get set up with the best coverage that fits your needs. Regardless of if you're ready to get your grandparents signed up for an insurance policy or you simply want to know more about a completely different subject entirely, PolicyScout is here to help every step of the way.
Contact us today for more information.