How can I buy life insurance for my parents?
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Asked January 16, 2012
Keep in mind that purchasing the policy will require the consent of your parents. Without them agreeing to the policy, you would not have any insurable interest unless you have been designated their power of attorney or some other form of legal guardianship. This is to prevent people taking out policies for people they have no connection to simply to profit from their demise, and while it may not be your purpose for buying the coverage, the insurance companies will be concerned about your right to buy the policy.
The first decision you need to make is what kind of life insurance policy to purchase. Final expense insurance is probably the cheapest, but it only covers basic funeral expenses and generally pays directly to a funeral home or agency. Term life insurance costs a little more, but it has a defined period of time, the term, before the policy expires. Whole life insurance will cost more than the others, but the policy will remain in force throughout your parents' lives and offers some financial tools as the policy matures.
Once you have an idea of what you are looking for, it is time to start shopping online for life insurance quotes. Online quotes will often offer immediate comparisons from leading competitors, which gives you an overall view of what the rates will be and allows you to fine tune your search.
After you have identified a few insurance companies, compare their financial ratings at companies like A.M. Best or Finch's to determine the financial ratings of the companies. Because a life insurance policy can extend for many years, it is important to purchase the policy from a reputable and financially stable insurer which is financially well-rated. Dealing with an insurance company that is not well rated could result in the collapse of the company at some future date and the loss of your money and the policy.
Answered January 16, 2012 by Anonymous