We all love our parents dearly and would like to protect them as much as we possibly can. If 2020 has taught us anything – it would be the importance of family. Many people who have purchased life insurance or are currently looking for life insurance protection. Have also questioned if they can insure their parents.
This question has been asked for many years, probably since the first insurance policies were created. Put simply to the question “Can I Insure My Parents?” there are two answers, both are answered in this guide.
Guide To Can I Insure My Parents:
Yes -You Can Insure Your Parents
You can purchase a life insurance policy for another person this includes partners, parents and many other relationships. You will have to be able to provide documentation to have a provable financial loss if they died. This is called ‘insurable interest’. For example, it might be they owe you a large sum of money which wouldn’t be repaid if they passed away.
What Is Insurable Interest?
Put in its plainest term, an insurable interest is a valid financial reason to insure somebody in a way that is recognised by the law in the country that you live. The rules throughout the UK vary as Scotland has slightly different requirements. Without a valid financial reason, you can’t set up a policy.
The Association of British Insurers (ABI) describes it as “the interest that a person has in something such as a particular property or another individual, which means that the person would suffer a loss should that property or individual be harmed.”.
The most common reason is to provide some money to you if another person were to die and you would suffer a significant financial loss. Some of the reasons you might want to insure someone else:
If your parents owed you a large amount of money that would be lost if they died
Repayment of a mortgage or debt you’re both jointly responsible for
In a business/working relationship together which cause a financial impact if they were to die
Getting Life Insurance For My Parents
You can only take life insurance on your parents if you have proven insurable interest. In England, Wales and Northern Ireland there is no automatic reason to insure your parents. Even if they provide monetary support. This means that there needs to be a potential financial loss between you, or a specific obligation (such as a maintenance order by the courts). At Life Insurance Cover we can help you to find life insurance for your parents.
In Scotland there is a maintenance obligation to children which means insurable interest does exist. This lasts until 18 years old, or 25 if the child is in education or training for a trade and still being supported.
Insuring Other People
Can I Get Life Insurance For My Spouse/Civil Partner?
If you are married or in a civil partnership then you are able to insure each other. There is no need to prove insurable interest when buying a policy to protect each other. Most people who fit in the spouse or civil-partner category will take a ‘joint life’ insurance rather than ‘life of another’. This means the money will go to the surviving partner. Life Insurance Cover will help you find the best policy for you and your partner.
However, if you’re interested in taking life insurance where you’re the only policyholder on your spouse’s life then you’ll need to either speak with our specialist team advisors or with a financial adviser.
Insuring an ex-spouse or civil partner is more complicated as the joint interest has been severed. Any policies you had prior to you separating can still be kept unless you cancel them.
Can I Get Life Insurance For My Brother Or Sister?
As with parents you can buy life insurance for your brothers and sisters. As long as you are old enough to buy a policy and there would be some form of a financial loss if they died. Examples of the need for insuring your siblings could include going into business together. Or you may have bought a home between you. You are not able to insure a sibling simply because you’re family, there must be a documented financial loss.
Are There Other Available Options?
Yes, there are a few available. They could take out a life insurance policy themselves and then the policy ownership can be transferred to you with a ‘Deed of Assignment’. You will be the owner of the life insurance policy and receive the claimed amount when the policy pays out. This is a legal document, which a lawyer or financial adviser can give you. Our advisors at Life Insurance Cover will explain how ‘Deed of Assignment’ works and how there maybe tax implications.
The law assumes that as both parties are involved and present. The owner would only transfer the policy if they wanted to protect them financially so there’s no need to prove insurable interest.
Another available option in placing a life insurance policy into ‘trust’. The policy ownership is transferred to the trust and managed by people named as ‘trustees’. The money can be provided to the correct people that benefit (beneficiaries).
Learn more about inheritance tax and trusts.
What Type Of Life Insurance Cover Can I Get?
Choosing the best type of life insurance to answer the question “Can I Insure My Parents?” can be quite a hard choice. As detailed above, joint life insurance is useful when insuring yourself and your spouse/sibling/parent. However, it’s important that you choose the right type of life insurance for you.
At Life Insurance Cover there are a number of cover options available including:
To find the right life insurance protection for you, simply complete the online quote form and let us help you find the best policy. Life Insurance Cover is a whole of market broker, which means we search all of the life insurance companies for you.
No – Financial Relationship
For most families who do not have a provable need or financial relationship as defined as an insurable interest by the Association of British Insurers. The simplest answer to “Can I Insure My Parents?” is unfortunately no you cannot for a variety of reasons. One of the main reasons is that the application process requires that the person who wants life insurance needs to complete the application themselves.
However, at Life Insurance Cover we understand that when you begin to consider taking out life protection policy to help provide for your own family if you pass away. It will also make you consider the preparations made your parents previously to prepare for the future. For example, you may have concerns about the cost of a funeral or any outstanding debts. Here at Life Insurance Cover, we are always here to help our visitors and customers.
Helping Parents Prepare For The Future
At some point in the coming years, you may find that your parent or parents want talk about what plans they have in place for the future. This may include what will happen to their finances after they pass away. It is very important to take an interest in what may be discussed. For many reasons as you would like to help your parents when you can. Although you cannot simply buy life insurance for your parents over 50 or 60 yourself. You can help them find the right protection including pointing them in the direction of various life cover policies so that they can choose. Part of the preparation you will need include many key areas include:
Do they have any current life insurance?
Have they paid off their mortgage?
Is there any outstanding debts or loans?
What assets, including property and savings, do they have?
Is either parent financially dependent on the other?
Although you may not be able to directly insure your parents on their behalf. Having a full and detailed conversation will make sure everyone knows where things stand. It will also help everyone to highlight any gaps in the planning and provide needed reassurance for the entire family.
Helping Your Parents Buy Life Insurance
If like many parents of a certain age, technology can be challenging as it constantly evolves. At Life Insurance Cover we can help you and your parents. We are happy to discuss the many possible policies available to you and your parents. Our simple quote form has been created to be as simple as possible. Our team will help you solve any potential shortfalls in the future planning made by your parents, whilst remaining impartial and answering any questions you may have.