Term Life Insurance for Parents

[LeBlanc]

Is buying a life insurance policy on your parents ever a "good investment"? I don't know much about term life insurance policies but my father called Select Quote to inquire and they told him that I could take out a $350K policy on him for the following rates:
10 yr - $75/mo
15 yr - $95/mo
20 yr - $120/mo

So what does that exactly mean? To collect on an insurance policy such as this, my father would have to pass during that term...correct? If I paid $17,100 over the course of the 15 year policy and my father did not pass during that time, would I just be out $17,100?

My father is only 53 yrs old and I have no reason to suspect that he won't live for many years to come.

[mickeyd]

Is buying a life insurance policy on your parents ever a "good investment"?

In my view life insurance is only a "good investment" for the agent selling the policy. The commission that he is paid will be financially rewarding to him/her.

If you would suffer a financial loss (not an emotional loss) upon the death of your father, a life policy may be in order. Most adults do not have a financial loss on the death of a family member unless they are in business together.

[ProspectiveBum]

I agree with MickeyD; there's zero reason to buy term life unless your Dad is somehow supporting you financially. My wife and I each have 20yr - 500k term life policies, purchased when our daughter was born. The purpose of the insurance is just to ensure that either of us could continue to meet our financial obligations (mortgage, college for kids, etc.) if the other passed (since we both work). The term ends in 20 years, when both of our kids will be college age. I definitely don't consider it an investment, just a safe-guard.

[brewer12345]

There is a burgeoning industry of sleazebags investors who buy life insurance on senior citizens. Some of them even go so far as to pay seniors to take out new life policies with the investor as beneficiary (Larry King did this). Generally speaking, unless the insured has serious health issues, these "investors" won't be interested unless the policyholder is at least 70. So even if this unbelievably morbid proposition appealed to you, it doesn't look like a candidate for a great investment.

[putty]

This is something that I had been wondering about to. My parents are in terrible financial shape and are barely making it right now on my father's disability and my mother working 50 or 60 hours a week (father 52, mother 44). If one of them were to pass away, the other would literally be up a creek without a paddle. I think my mother may have a small life insurance policy, but with me being the only child of theirs with any kind of money I would be responsible for helping the remaining one and paying funeral costs. How would you feel about a situation like this?

Oh, and OP I apologize if you feel like I am hijacking your thread. Mine seemed close enough to yours to put it here.

[ats5g]

Putty,

If your one of your parents would need extra money coming in if the other died, then they probably have a need for life insurance. Term life insurance is pretty cheap. IMO, the first question is how much income does each need to replace if the other dies. For example, if father passes, does his disability go away?

- Alec

[putty]

Thanks for the reply ats5g. It's hard to even imagine one of your parents passing away so I can see why all too many people neglect to even think about this. I am going to sit down with my mom and discuss this with them. They live in a very low cost of living area and don't have any extravagant tastes beyond the basic necessities so 25k inflation adjusted would be enough for either of them. But then I wold need subtract out the disability and/or SS to find out how much more they would need.

I am really glad the OP posted this. I think this is something I, unfortunately, need to address.

[ats5g]

Originally Posted by putty

Thanks for the reply ats5g. It's hard to even imagine one of your parents passing away so I can see why all too many people neglect to even think about this. I am going to sit down with my mom and discuss this with them. They live in a very low cost of living area and don't have any extravagant tastes beyond the basic necessities so 25k inflation adjusted would be enough for either of them. But then I wold need subtract out the disability and/or SS to find out how much more they would need.

I am really glad the OP posted this. I think this is something I, unfortunately, need to address.

FYI - they should have [or can get from ssa.gov] their SS statement showing what their spouse/dependents would get in SS if they died or become disabled.

My in-laws are probably going to get custody of our niece and nephew soon, so I'm going to have a talk with MIL about more life insurance.

- Alec