You can take care of your elderly parents by adding them as beneficiaries to your policy.
As a kid, your parents gave you everything you needed to survive and thrive, like food, shelter, education, and (maybe) Saturday morning cartoons. They also might have instilled the importance of having smart financial goals for your future. So, as they get older, you want to be able to, in turn, become their caregivers in their twilight years and help with their end-of-life planning. On that note, did you know that you can add them to your life insurance as beneficiaries? But how does this process go? Let’s take a closer look.
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Why would your parents need to be on your life insurance?
Adding your parents to your life insurance policy might not be something you think about. After all, children typically outlive their parents. While this is still mostly the case, there are a few factors that would make you want to add them as beneficiaries. For example, due to modern science and medicine, people are living longer, meaning you can get to the point where you and your parents both reach retirement and elderly age (think Dorothy and Sophia on the timeless classic, The Golden Girls).
Also, in many cultures there’s an expectation that adult children take care of their parents in their later years. While it’s a loving thing to do for them, it’s an extra expense for you and your family, so you have to consider the financial aspect of this in-home care. While older adults can receive assistance from government programs, the typical out-of-pocket expense for families ranges around $144,000 for around four years of care. This is a huge cost for a lot of people.
Let’s also consider how your parents may have helped you out over the years. They might have cosigned for a loan, helped with the downpayment for your house, or assisted with other expenses.
So what does all this have to do with adding them to your life insurance policy? You can make sure your parents can live a comfortable life if they have financial protection. Also if there is any outstanding debt they helped you with, they would be responsible for it, like if they cosigned for a loan or helped you with a car or home payment. Adding your parents to your policy would protect them from being on the hook for a lot of debt, since they would receive the death benefit payout as your beneficiaries.
How you can help them with end-of-life planning
Adding your parents to your policy helps set them up with financial protection if you predecease them. It will also help with planning for their years post-retirement.
When you first buy life insurance, it might just be for yourself. You may eventually expand it to include a spouse, a partner and/or your children. If you then decide to also add your parents, it doesn’t mean coverage for your spouse or your kids will go to the wayside. You can have multiple beneficiaries—you just need to designate how much of the payout goes to each person.
Once your parents are on your policy, it’s important to do thorough research so you understand the amount of coverage needed for them, especially as they age. Luckily, life insurance covers a lot of necessary expenses. As you take care of elderly parents, there are a range of things that may be top-of-mind—from housing to healthcare to in-home care. When you choose your life insurance policy you have to make sure this coverage is also available.
How to tailor a plan for your parents
Once you have a general idea of what they need, you can adjust your policy to include them. Here are some things to consider:
- Determine how much coverage is necessary. Calculate all their expenses as well as the things you are financially responsible for.
- Understand what expenses they may have as they age. Could they need a nurse or home attendant? Any reason to think they might have specific health problems when they get older?
- Figure out what debt they helped you with. It could be anything like loans or as co-signers to your house.
- Make sure they’ll be able to pay for their own home. Mortgages are a big expense so the death benefit could make sure they never miss a payment.
- Set them up financially if they become your children’s caregivers or guardians. There should be protection designated for themselves and their grandchildren.
- Cover expenses of funeral and burial arrangements. If they don’t have their own life insurance to cover these possibly sky-high costs, it’s important to determine how much this could possibly cost.
You love your parents, and just like they took care of you as a child, you can take care of them by adding them as beneficiaries to your life insurance. You can give them financial security and independence to be able to cover all their necessary expenses. By doing so, you can rest easy knowing that if you should die before them, you will provide them with the financial security they need through their retirement years.