Most people have to cover the cost of their parent’s funeral and the best way to fund a funeral is by planning in advance. While a simple savings account will work, many people choose to take out life insurance policies for their parents or other aging relatives to get help with funeral costs and other bills their loved ones leave behind. If you would like to do the same for your parents, follow these steps.
When purchasing life insurance for your parents, discuss the policy with them, including coverage amounts and who will pay the premiums. Explain that you are protecting your family’s financial future by making sure you can pay for their final arrangements when the time comes. Once you’ve decided on how much coverage to take out and which insurance company to use, you can move on to the next step.
The owner of the policy can make changes to the coverage, beneficiaries, and billing information. They also control who has access to information about the policy. If your parents will not own their own policy, it’s important to discuss that in advance.
You’ll also want to clearly define where any leftover cash goes once final expenses are paid in full by designating the policy beneficiaries correctly. If you are paying for the policy, that could be you. If you are sharing the cost with siblings, you may also split the extra funds. In some cases, your parents may want the funds to go to charity, grandchildren, or to cover other debts.
Once you’ve gone over the details, it’s time to choose a policy. There are several options, and some may be better than others depending on your financial resources as well as your parents’ ages and health.