Life insurance for senior dad?

June 23, 2007 3:48 PM

Should I buy life insurance for my 63-year old father?

I am thinking of getting a universal or variable universal policy for my dad. I don't mind paying the premiums because they go into a tax-deferred fund that increases in value anyway. His only health issue is high blood pressure. Which companies do you recommend?

posted by Kimpossible to work & money (6 comments total)

As a former salesperson for a major insurance company, I can tell you that getting life insurance for someone who is 63 years old is going to be prohibitively expensive. With high blood pressure, it's going to up the rate even more -- if they'll even issue a policy at that age at all.

Don't bother with life insurance. If you're looking for tax-deferral, then go with a variable annuity policy. These days, the major annuity companies (PacLife, MetLife, AIG, AXA, etc.) have great living benefits that allow you to capture the upside of the market and protect against the downside, usually with some kind of lock-in guarantee (i.e.- every time the investments hit a high water mark, the value is locked in and cannot go down). The only difference is that you'll need to put the majority of premiums in on the front end instead of over time, like with a life insurance policy.

Go talk to a financial adviser like an Edward Jones rep for more information. I don't know what you're trying to accomplish by paying for a life insurance policy except profiting for yourself upon your father's passing (or passing a legacy on to your children?), but a financial rep can at least give you options that fit your specific situation. Most of them don't charge for initial consultations, so it won't cost you anything to at least get more information. Also, look for independent reps, because they can use a broad range of products with their clients, which will help you get the exact fit and lowest price. Despite what they will tell you, reps at insurance companies like State Farm, Farmers, or Allstate are captive to their company's products, or products that the corporate side chooses.
posted by PandemicSoul at 4:01 PM on June 23, 2007

Does your father have dependants that rely on his income? Will you or someone in your family be put into financial hardship if he were to pass away? If not, then he doesn't need life insurance.
posted by donajo at 9:01 PM on June 23, 2007

What is the purpose of a life insurance policy here? There are usually only two purposes for a man of his age: providing for dependents or providing funding for paying estate taxes. Does he have people dependent on him for support? If his current assets are less than $2 million, estate taxes are not likely a concern.

>I don't mind paying the premiums because they go into a tax-deferred fund that increases in value anyway.

This may make sense or it may be nonsense, depending on the situation. More information is needed, and it should be given to an advisor, as PS suggests.
posted by yclipse at 9:01 PM on June 23, 2007

Your profile doesn't say where you are. In the UK, you can't even buy life insurance for a parent (or a child) as you do not in law have insurable interest in their life. You can only insure the life of yourself, your spouse, or a person you have some sort of financial relationship with (e.g. a creditor... if George owes you £10,000, you can insure George's life for £10,000).
posted by happyturtle at 11:14 AM on June 24, 2007

In the U.S., it's up to the insurance company underwriter to determine whether or not there is insurable interest.

In this instance, I think the person asking the question was intending, by the way the question was worded, to have her dad apply for and "buy" the insurance, and then she would pay the premiums for him. Nonetheless, one could make the case that if the death of your parent was to cause a financial hardship of some type, then you'd have insurable interest.

Similarly, many U.S. life insurance companies market life insurance for children. The idea is that the death of a child will create a hardship for the parents, with the cost of funeral arrangements and grieving (taking time off work, etc.), and as such there is an insurable interest to that relationship.
posted by PandemicSoul at 11:51 PM on June 24, 2007

... I may be wrong on whether the poster intended to have her father apply for the insurance, or she intended to apply for it on his life. Just got that from the when she said that she was okay with paying the premiums. Anyway...
posted by PandemicSoul at 11:52 PM on June 24, 2007