Detailed Guide to Life Insurance for Grandparents
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When it comes to life insurance there is so much to think about and consider, and when it comes to life insurance for grandparents who are older there is definitely more to think about and consider before you can settle of exactly what you want to go for.
As a result, having a clear guide to help you understand what to do and when it is very important.
It is of great importance to take your time and plan yourself very well with all the steps you need to take to avoid regretting in the future.
This is a guide that will be discussing in details exactly what is it that goes on into getting life insurance for your grandfather or grandmother.
By the end of this guide, you will have a clear picture of the do’s and don’ts in the process of getting life or burial insurance.
- Step 1: Why Your Grandparents Need Life Insurance?
- Step 2: Understand the Costs of the Funeral
- Step 3: Health Status of Your Grandparents
- Step 4: Life Insurance for Grandparents without Their Consent
- Step 5: Set Your Insurance Goal
- Step 6: An Independent Insurance Agent
- Step 7: Select the Best Policy for Your Needs or Goals
- Step 8: Choosing the Right Company
- Step 9: Avoid or Reduce Extra Taxes
- Step 10: Choose the Beneficiary Wisely
- Step 11: No Need for Physical Presence of Your Grandparents
- Step 12: Budgeting and Paying Premiums
- The Bottom Line
Step 1: Why Your Grandparents Need Life Insurance?
This is the very first step and the question that should come to your mind before you follow the rest of the steps into life insurance. By understanding this then you will be able to make better steps in future.
There are a number of reasons that might require you to take a life insurance for your grandparents.
To Take Care of Burial Expenses
This is one of the most common reasons and this happens when you realize that you are not in a position to take care of the expenses to be incurred when it comes to the burial of your grandparents.
With your current financial ability and the cost of their funeral, you can predict. Other than that, you may do this in case you do not want to have financial constraints on this unforeseen future.
When You are Running on Huge Debts
Debts is another thing that might lead you to take a life insurance. When talking about debts it is on both sides. That is a case where your grandparents or yourself are in debts.
This means that you may end up having a really difficult experience in the future. Taking a policy will go a long way in helping reduce the load on you.
The Need to Take Care of the Surviving Spouse or Grandchildren
You will find that one of your grandparents will die before the other. In such circumstances, the surviving spouse may be faced by a lot of financial problems which definitely arise from funeral cost.
At the same time, there will be grandchildren. You do not want to be left in problems especially if you do not earn enough to take care of their funeral in case of their death.
As a result of this, it is advisable to take a life insurance for grandfather or grandmother. It is a smart move that will leave the future of the spouse or grandchildren better.
Step 2: Understand the Costs of the Funeral
Everything about life insurance is attached to the funeral in most cases and this is your major concern. Which means that you should be very well informed and have a clear picture in your mind of all the details.
The main advantage of understanding the funeral cost is it will help you have a clear idea of what to expect in the end. It will also give you an understanding of what kind of burden you will be having compared to how you have organized or prepared yourself.
In some cases, you will find that your grandparents have never set aside any money to take care of the funeral.
In most cases, funerals will take between $5000 to $10,000 depending on the requirements of the family. It will also help you understand how much you are covering. This is important in directing you to the right type of policy to take to make sure it is not expensive but it does cover all the expenses at the funeral time.
Step 3: Health Status of Your Grandparents
When it comes to taking a life insurance for elderly, their health status is really a big concern.
Health will affect a lot of things and in a way, you did not expect. One of those ways is the cost of the premium.
Insurance companies will not give you an affordable premium for your grandparents if they have serious issues. This is why it is important to understand their health status before you go ahead with anything.
Some of the things to know are, for example, if they have undergone major surgery or suffers any serious health condition you will end up with a very expensive premium, read it.
The best way to go about this is by having them to take medical tests before you reach to the insurance matters. The main reason for this is because they will be asked to take medical tests by some companies.
Here are things you should obtain just to be clear and safe.
- Height and weight details
- Records of major events in their health such as hospitalizations, strokes, cancers, heart attacks, etc.
- Details of their both past and present prescription medications.
- Are they using tobacco or alcohol? And to what extent?
- Have they in the past been diagnosed with any conditions such as high blood pressure or diabetes?
- What risk habits do they have if any? For example, rock climbing or sky diving.
If possible you should make sure that they reduce habits such as smoking or drinking just to make sure they are good.
However, in cases where there is a serious health condition you can opt for a policy where they do not have to go through any medical test or exam. We can assure you it will be more expensive than the normal ones.
Step 4: Life Insurance for Grandparents without Their Consent
It is more important than many may think and consider it. It is important to make sure someone knows what you are doing before you go out looking for a life insurance policy for them.
In many cases, people spend a lot of time trying to gain as much as they can on insurance without talking to their seniors and end up with wasted money and time in the future.
Not all seniors are happy with the idea of digging into their personal lives as you seek to understand something life their health status without talking to them. You need to make sure that once you are done they will be willing to sign those papers either about their health or something else.
The best step to take is to talk to them and gain their consent to proceed with the process to avoid any problems in the future.
Step 5: Set Your Insurance Goal
This is something new to many people and what you did not expect. However, it is important to have goals when you are taking a life insurance. The reason for this is because there are targets you want to achieve in terms of the financial security once they die.
There is a very simple and clear way to come to this. The best way is to have a talk with your grandparents. With them, you can be able to discuss the type of funeral you want to have once they die.
This will project the budget. At the same time, they will be able to contribute any ideas in case they are will to support you.
If they will support you it means that there will be a lesser burden. Also, look at what you want to be left with once you are done with their funeral. In that case, you will align your insurance goal very well and know what premium to go for.
Step 6: An Independent Insurance Agent
There is so much that goes on with insurance companies hence the importance of finding an insurance agent of your own. There is so much that you need to understand to make sure that you do not make any mistakes when going through this.
An independent insurance agent is important since you will be working with him alone and completely on that matter. You do not have to take it as an expensive option since you will save a lot of things by going with the right agent or broker.
Brokers or agents have many advantages in such cases. You will be guided on the best companies to work with. A broker will be guiding you on the right paths to follow. If you do not understand the requirements of the insurance policy to take, then he/she will be guiding.
You need to make sure that your adviser, broker or agent understands everything that you are looking for. Also should understand the condition of your grandparents to be able to help you find the best policy. You are always welcome to contact us for help.
Step 7: Select the Best Policy for Your Needs or Goals
I could easily say that this is the best part of this guide. This is the most crucial part when you want to get a life insurance policy. Making sure that you go for the right policy will play a very important role in helping you get what you want, value for your money and achieve your goals.
Other than that, making the right decision in this step will help you in making sure that you do not overspend and leave yourself struggling for taking a very expensive premium.
The type of life insurance policy to go for will be highly affected by the needs you have.
What do you want the life insurance you are taking do for you?
To some people, they want something that will take care of their final expenses while there are others who want to be able to pay off some debts or mortgage. All this has to be put into consideration.
There are two types of life insurance policies to discuss in this case. They include:
Term Life Insurance Policy
A term life insurance policy is mostly offered for seniors of up to 70 years old. Many companies do not offer covers for above this age, however, there are few who do.
If your grandparents are over 70 years, read the next part (permanent whole life insurance).
The policy is mostly taken in the case where you would like to take care of some bills that are pressing you.
In many cases it can be car note, a mortgage note, income replacement or other financial constraints that you expect should be taken care of in the future.
Term life policy works by expiring at a specific period of time in the present. That means that you can take the life insurance in bits of a certain number of years. They may be available in terms of 5 years, 10, 20 or even 30 years. This means that your policy will expire after this number of years and you will benefit.
There are a few things that you should know about the term life policy.
One of them is the fact that it will expire in one day and that’s all.
Another thing is that they are always the most affordable ones.
It is very crucial to make sure that you have a clear understanding between you and your seniors to make sure that this is what they want. This is because once the policy has expired it will no longer benefit them. They have to be comfortable with this type of arrangement.
Permanent Whole Life Insurance Policy
This is the second option you have when it comes to taking a life insurance policy for your grandparents. When you take a whole life insurance policy it means that it will be with you for the rest of your life. This is an insurance policy that does not expire in the middle of time.
However, permanent whole life insurance is more expensive than the short term life policy. On the other hand, it comes with the advantage of covering you for a long time until your death.
You can take this policy in case you are interested in donating something to your family, to reduce the final life expenses that will be left to your family or for the sake of something like estate planning.
For this case, seniors who are above 80 years old have no other option other than to take this one since insurance companies do not offer short term policies for people above 80 years old.
Step 8: Choosing the Right Company
It is a factor that you should think about a lot. Do not just look at the type of policy. The company you are dealing with matters a lot. In this case, you can work with your broker or advisor to come to a conclusion on the best company to work with.
Here are some of the factors to consider when it comes to select the best company for your life insurance needs.
Different companies come at different prices for their premiums. When you are looking for a life insurance the whole idea is to go for a company that will offer you’re the most affordable prices.
You do not want to strain yourself and leave you broke. In this case, you should consider looking at different companies and comparing their prices to make sure you get to the best.
One of the ways of doing this is online. You can easily dig as much as you can online to compare various company prices on various prices.
As companies are different, so are their services and the way they conduct their activities. In this case, you will really find varying requirements from different companies before they can offer you a policy.
There are companies out there who are so strict with older people. They will even do so many health tests. If you can find companies that are less strict even the better to make sure you enjoy the services and get the best.
Reputation matters a lot when it comes to selecting a company to work with. Some people will tell you it does not matter but it does.
You do not want to take a policy and pay a lot of money to a company that does not pay claims to their clients? Do you?
No one wants to start lawsuits with companies that have problems settling claims upon expiry of policies. This means that you have to be wise enough and go for a company that is well-known for keeping their word.
Have you heard of people taking life insurance from a company then the company is declared bankrupt after a short time? Or you take a life insurance from a company then it is closed down after a short time?
These are some of the things you need to look at to make sure you are doing the right thing. A life insurance is not something that will mature within a few months. It is a policy that might take some years. You need to be sure that this company will be there after all those years and pay all the claim.
Step 9: Avoid or Reduce Extra Taxes
Yes! Taxes. Many people start complaining and crying how much they are suffering to huge tax deductions after their insurance policies expire. Definitely this a disappointing event and disturbing especially when your grandparents are already dead.
Everything should be moving smoothly at this point. And not on the opposite side.
Here is a smart thing to do. To make sure you benefit from the claim as much as possible make sure you reduce the tax burdens as much as possible. This way you will have an easy way out.
Here is how to do it.
A life insurance policy will always have three parties. That is the insured, owner and beneficiary.
To make sure that you reduce extra taxes, try and combine two of the three parties. The Insured is the individual whose life the policy is insuring. In this case, is your grandparents.
The owner is the person who pays for the premiums. In this case, it can be you or a partnership between you and your grandparents.
And lastly, the beneficiary is the person who will receive the claim upon the death of the insured. If you are insuring your grandparents, then you are the beneficiary.
From this information, we can see that it is very easy to combine the owner and the beneficiary of the insurance policy. Since you are the one taking the insurance policy, paying for the premiums and controlling everything, you are the owner. And at the same time once your seniors are dead you will be the one to benefit. Combine these two parties to reduce taxes as much as possible.
Step 10: Choose the Beneficiary Wisely
The question of choosing the right beneficiary is equally important when you are taking a life insurance. It is a factor that brings confusion in some cases and ends up causing problems at the end. This is also something that has been witnesses severally especially in cases where it is a life term policy.
In those cases, whether you are the one taking care of the premium costs or them, there should be a clear understanding. It is advisable to talk to your seniors before taking the policy and have a clear agreement.
Some grandparents would like their beneficiaries to be charities while others are okay with the family. It is important.
Another thing is to make sure that you keep all the information about the beneficiary updated as much as possible. Things change in life and it is important these changes to be addressed as early as possible.
For example; changing of residence or in the event of passing on of a beneficiary. Deciding who is next in line is important and should be done early.
Step 11: No Need for Physical Presence of Your Grandparents
You may be surprised how this can happen. This an advantage due to modern day technology. In some cases, you might have identified a company to work with that is in a different state from where you live.
In other cases, you might find out that your grandparents are living far from you. Maybe in another state. There is no need to worry.
It is completely not needed to have them physically moving especially when they are too old. There are alternatives that have been provided by many insurance companies which involve electronic application processes.
When you are worrying about signatures, there is also electronic signature systems.
Electronic signatures can be in the form of email or voice signature. Once you have made an application and made your signing through email signature it will take 1-3 working days for many companies to give a response.
For a voice signature, it is a simple process that should last for between 10 and 20 minutes.
Step 12: Budgeting and Paying Premiums
This is a factor that cannot be left out. And that is because it highly affects many things in life insurance. Whenever you want to take life insurance you have to be very clear on what is it you want at the end of the policy.
Other than that, a very important factor to consider is how much you are willing to spend when it comes to paying for the premiums.
The whole idea behind this is to make sure that you do not take a premium that you will not be able to pay. Make sure you go for a premium that is within your financial abilities.
Once you have made a decision and selected the best premium then you have to keep it active. This means that you have to pay for the premium costs to keep everything working and active.
You do not want, to have problems claiming your benefits once your grandparents are dead simply because you did not pay for the premiums as required.
Failure to pay for premiums as required brings with it so many problems that are really losses not worthy.
The Bottom Line
Life insurance for grandparents is really a good idea. It is a step that makes things really simple and smooth once they die. As a result, it is important for you to plan very well in advance to make sure that you get the best out of it.
However, it is important to understand that life insurance is not just for the grandchildren to take for their grandparents. If you are a senior, it is important for you to think about life insurance.
As you start aging there are really many obstacles on the way. Some seniors may even fall sick and this means a lot of burden to the family.
As a senior, taking a life insurance is a good way of giving your family a better and easy experience after you are gone. The above steps are a clear guide of everything you need to know about.