Normally you’d think of getting life insurance for your dependents – your significant other, your kids, even your grandkids. But over at Mapgirl’s Fiscal Challenge, she’s single with no children, but still has a sizeable life insurance policy. The beneficiary? Her parents. In case something happens, she wants to be sure that her parents have some money to help them in their retirement in her place. They have no idea.
First, I was surprised. Then I felt guilty for never thinking of doing that myself. Then, I remembered that I really don’t have much of a policy for my wife either. Right now, since it’s just the wife and me, we each just have a $100,000 policy through work. Basically the logic is that if something happens to either of us, we are each still able to support ourselves and move on financially. (Plus I’m not allowed to go skydiving anymore.) But once there gets to be even a whiff of possible daiper duty, we planned on getting significant policies.
Back to the parents – both of ours are in similar situations – They are relatively well-prepared for retirement as far as we know, but it’s not like they are Rockefellers. It’s definitely still a point of concern for them. And indeed they could have put away more if they weren’t paying for all or part of our schooling (and feeding and clothing us and all that…). If they were to fall on hard times, we and our siblings would definitely come in to help, whether with time or money. But what if we weren’t around? Of course our parents would never suggest such a thing, but in these days of expensive healthcare and long life expectancies, maybe this will become more common. Another thing to chew on.
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Thanks for the link Jonathan. I tihnk it’s more a function of whether or not there are other siblings amongst whom to spread out the expenses. My family is still traditional and the cousins tend to discuss things like supporting our other cousins who are less able or are in less lucrative jobs. We do what we can. Do what’s best for you, but definitely get an idea of where your folks are at. I was really surprised to sit with my folks one day and realize their net worth was almost a million dollars and that they would need less help from me than I originally thought. It was quite a relief.
Jonathon I’m not sure if you’ve looked out in the industry, but I was getting 100,000 life insurance coverage and went outside of my company and now I’m getting 500,000 coverage for the exact same amount of money. Generally the company insurance is the worst, so I would definately look around. You can increase it if you’d like.
I personally think you should take care of your wife first, especially if she depends on your salary to an extent and your parents don’t depend on it what so ever. I think it’s more of “insurance” to insure if something happens, not to send money to your parents because you passed away. If you planned on taking care of them or you are sending them money now, then I’d put them down as a beneficary, if not then I would rather have a higher percentage go to my wife. If you have kids, then you know the situation totally changes.
Since they’re relatively well-prepared for retirement, as you mentioned, your 100k policy and 100k net worth, with a total of 200k, are more than enough….
Not to consider both of you may have siblings…
That’s a really interesting idea. I have to ask, though — why don’t the parents know about the policy?
Insurance is nearly always a losing proposition.
There are times when it may be necessary for guarding against otherwise very difficult situations (like leaving one’s spouse widowed with children) but unless your parents are counting on you for their retirement, I don’t think that providing an inheritance for one’s parents qualifies as a catastrophic circumstance.
I think it makes more sense to put the insurance premiums into savings, and make your parents the beneficiaries of your estate.
One other factor; having recently received a modest inheritance from a close relative, I found that, at least in my case, there is a fair amount of angst that goes along with it. I can only imagine that the pressure of handling the money properly would be severely compounded if it’s a parent receiving an inheritance from his child.
Right now we are paying $6 a month each for $100,000 in coverage, I think I did some quick online quotes for comparison. I’d be surprised if a private company could beat that.
I agree on only using against big risks. I guess everyone has to judge if this is a big risk. Unfortunately I think a lot of parents will be depending on their kids in their old age.
When you have no children and no wife the parents seem like the best choice but when you have a family of your own things gets more complicated and your first concern is your wife and children who are most likely getting the largest amount.
I just checked the one I’m using and 100k coverage for my age, which I believe is similar to yours is $4.62 a month $23.08 is 500k of coverage. AMbest A+
Now that I’m thinking about it, it wasn’t the same cost. I went from around 10-15 bucks for 100k when I was at the company and for 5 times the coverage it cost me like 20 bucks at that time.
If I took 6 bucks and do 5 times the amount of coverage you would pay 30 dollars though compared to like 23 dollars. Then again it’s not as critical unless your wife would really depend on it and if you have kids, then it’s more important……..IMO
What kind of term length are you doing? My guess is 15-years? I was looking at 30-year terms, which of course isn’t a proper comparison to the yearly temporary policies of what I’m using, but I didn’t want to lock in for anything shorter than that. $500k of 30-year term life for $23 a month would be awesome. What rate quote site did you use?
I’m trying to find my information, but I don’t have it with the computer I’m on, but I believe I found it here http://www.term4sale.com
actually using that site I’m getting 15 years at 16 dollars and 30 years at 33 dollars.
The one I’m using is kind of strange, it’s a non-profit organization that has strange eligibility and last year they gave back all members 25% refund. It’s not through my work, but the eligiblity is that I have to have a position to the one I’m working in and I have it as long as I don’t miss a payment. Hope the link was at least helpful
Something to consider depending upon the situation.
I signed up for my employer’s life insurance and made my mother the beneficiary since I am living at home helping her with my dad and other things around the house.
She would have to pay someone to do many of the things around the house like mowing the lawn in addition to more help with my dad.
I definitely have my parents as my life insurance beneficiaries and they have no idea. I halfway support them now, I can’t imagine how terrible it would be for them to struggle if anything happened to me. I have an older sibling but they could not depend on him for support.
i hear a lot about these guys
http://www.zanderins.com/term/termlife.aspx
never personally dealt with them, but will probably go through them when i get a little bit older, get married, and have other people that depend on me
Our parents are in our will, but we do not have insurance for them. We each have term life insurance through hubs employer, which, when I did the price comparison, is waaay cheaper than going with another provider. We have just enough for each of us to pay off the mortgage, which is our only debt.
samerwriter:
“I think it makes more sense to put the insurance premiums into savings, and make your parents the beneficiaries of your estate.”
Correct me if I’m wrong, but:
Many life insurance policies moonlight as savings plans, and if you do die, the benefits are passed to the beneficiaries without first going through the estate (or probate), thereby saving taxes and hassles.
-Zero-
I want to get life insurance on my parents but they wont even discuss the issue are there still options??