Whole Life Insurance for Parents: 5 Questions to Ask

Summary: Whole life insurance can help elderly parents provide for their loved ones when they're gone and themselves when they're alive. But buying the right coverage for them can mean hard conversations along with a hard look at their finances. These five questions can help ensure your parents and their legacy are well-protected.

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Your parents have always been there for you. Now, it may be time to return the favor.

As your parents age, it’s important to look at their physical, emotional, and financial circumstances warmly but honestly. And even if you're already assisting with errands or lending a hand around the house, you may want to take a step toward helping to secure their financial futures. That could mean looking into life insurance policies for your parents.

In particular, whole life insurance can be an important piece of your parents' financial strategy, and yours. It may offer long-term security, some peace of mind, and the ability to leave a lasting gift. But before you jump in and buy life insurance, it’s helpful to ask the right questions. These five questions can help you and your parent have an open, productive conversation.

What’s whole life insurance?

As the name suggests, whole life insurance is a type of permanent coverage designed to last for the policyholder’s entire life: As long as premiums are paid, the policy can’t be cancelled. But unlike other kinds of permanent life insurance, premium payments on whole life stay the same for the life of the policy. That kind of predictability can make it easier to budget and plan.

Whole life insurance policies, which can come in varieties like traditional, simplified issue, guaranteed issue (which don't require a medical exam), and others, are available in most states up to age 85 (75 in New York). And while whole life generally costs more than term life insurance, its value goes well beyond the death benefit that beneficiaries receive if the policyholder dies.

That’s because whole life policies also build a "cash value." Essentially, this separate account grows tax-deferred, boosting the value of the policy over time. Even better, your parents have access to that cash value for almost any purpose, from planned vacations to unexpected medical bills. Down the road, cash value could even help the policy pay for its own premiums. Even so, note that any cash value they use will lower the policy's death benefit by that amount.

Do your parents still have dependents?

Even if one or both of your parents rely on you to help with their care, there might be others who depend on them for financial assistance. For example, they might have an adult child with special needs who requires costly living arrangements. Perhaps they’re helping to fund college for their grandkids, or support them once they’re out of school.

Whatever the case, it’s important to know who, if anyone, will need to be taken care of financially when your parents are gone.

Do your parents have a clear financial picture?

Talking to the people who raised you about their own finances may not be easy. Part of that's generational: Chances are, they never had that talk with their own parents.

But seeing your parents’ full financial picture can help you understand their needs. And if whole life insurance can help meet those needs, from covering expenses while they're alive to leaving a legacy when they're gone, you’re one step closer to finding the right policy.

Here are a few key questions to guide the conversation:

Answering these questions can help you decide whether whole life insurance will support their needs, both while they’re living and when it’s time to leave a financial legacy.

What are your parents’ future goals?

Just because your parents are getting older doesn’t mean they’ve stopped planning for the future. They might have goals like downsizing to a new home, taking a meaningful trip, or simply making sure their day-to-day needs are met without financial strain.

Understanding their goals helps you figure out whether whole life insurance could support them, not just in the long term, but in the present. That’s because whole life policies build cash value over time, which your parents can use while they’re still living. (Remember, though, that any cash value they tap lowers the policy's eventual death benefit.)

Whether it’s to help cover an unexpected expense or provide extra breathing room in retirement, having that financial flexibility could help bring their plans to life.

What kind of legacy do your parents want to leave?

Legacy planning isn’t just for the wealthy. Whether your parents want to leave a financial gift for their grandchildren, support a cause they care about, or simply ensure no one else has to carry their final expenses, life insurance can help make that happen.

Whole life insurance can be especially helpful here. The death benefit is typically tax-free and can provide a clear path to leaving behind something meaningful. Even smaller policies can make a big difference, helping family members cover bills, pay for college, or keep a family home.

Asking about their legacy goals can guide you in finding the right insurance coverage to match their wishes.

What are your parents’ final wishes?

This may be the toughest subject to discuss. After all, the older we get, the more we’re faced with the reality of mortality.

Even so, planning for final expenses can be critical and costly. These days, burial and funeral cost options such as burial plots, caskets, headstones, service amenities and transportation costs can quickly add up. The total cost of a funeral could easily exceed the $10,000 mark.

So, delicately ask your parents what they’ll want, whether they’ve set aside any money to cover it, and how much. If there’s a gap (or no savings at all), life insurance can help.

Frequently asked questions (FAQs)

Can my parents convert a term life insurance policy to whole life coverage?

Maybe. Many term life insurance policies include a conversion feature. That means your parent may be able to switch their term policy to a whole life policy without taking a medical exam or answering health questions. This can be a great option if their term policy is about to end and they still want lifetime coverage. Just make sure to check the policy’s age limits and deadlines for converting.

Can I buy whole life insurance for my parents?`

Yes, but you’ll need what’s called insurable interest. That means you must show that you would face a financial or emotional loss if your parent passed away. As their child, you typically qualify. You’ll also need your parents’ consent, and they’ll usually need to sign the application.

Can I afford whole life insurance for both parents?

Whole life insurance tends to cost more than term life, but it also lasts a lifetime and builds cash value. Whether it fits your budget depends on your parents’ age and health, the size of the policy, and whether you plan to use the policy’s cash value in the future. An insurance professional can help you compare options and find a policy that fits your needs and your wallet.