Life Insurance for Parents in Canada: Can You Buy It, and Is It a Good Idea?

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Picture of By <span>Matthew Roberts</span>
By Matthew Roberts

Updated on May 29, 2024

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Picture of By <span>Matthew Roberts</span>
By Matthew Roberts

Updated May 29, 2024

Visit author page

4 minute read

Article Contents

Yes, you can buy life insurance for your parents in Canada. However, you need their consent to do so. You must also meet other conditions like completing health assessments, identifying their financial needs, and defining the policy’s purpose. Whether or not it’s a good idea will depend on you and your parents’ financial condition and needs. 

Life Insurance for Parents at a Glance

  • Getting your parents insured may be a good idea if you’re looking to cover their medical bills, repay debts, or provide income replacement.
  • Buying life insurance for your parents requires their consent, so bring it up with them before you start searching.
  • Involving your parents in the search for life insurance is highly recommended to ensure you get a policy that fits their needs.

Are you planning to get insurance for your parents? Keep reading to learn whether it’s a good idea and how to do it.

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Should I Get My Parents Insured?

Whether or not you should get your parents insured depends on your needs and theirs. Some people may get life insurance for their parents so the death benefit can cover their final expenses and pay off outstanding debt. However, some people may choose not to do so because the cost of insurance outweighs the potential final expenses when their parents pass.

Why You Might Need Life Insurance for Your Parents

You may need or want to get your parents insured for various reasons. Here are some common reasons why people buy insurance for their parents:

  • Covering final expenses like medical bills and funeral expenses
  • Paying out remaining debts
  • Estate planning
  • Providing income replacement in place of a working parent
  • Protecting shared interests like a family business

Types of Life Insurance Coverage for Parents

Generally, life insurance types available to parents are similar to those available to other people. Let’s take a look at the four common types of life insurance bought for parents:

Term life insurance covers for a limited time, ranging from 10 to 30 years. When this term expires, you can renew the term, but the insurance company will use your parents’ current age and health condition. Since insurance gets more expensive with age, term life insurance may be prohibitively expensive if you keep renewing your parents’ policy as they get older.

Whole or permanent life insurance provides coverage until the insured person passes away. It’s more expensive than term life insurance, but you don’t have to renew your parent’s policy after the initial qualification. Another benefit of whole life insurance is that it can accumulate cash value over time, which they can use for various purposes.

As the name implies, guaranteed issue life insurance means qualification is guaranteed. As long as your parents meet the age requirements and some basic qualifications, they’ll receive coverage without having to undergo medical examinations or health questionnaires. While they’re generally more expensive, this can be a good option if your parents have health issues or disabilities that make qualifying for other types of policies harder.

Your parents only need to answer basic health questions to qualify for simplified-issue life insurance. This can be a more affordable alternative to guaranteed issue policies, letting your parents get insurance without passing a medical exam.

Final expense life insurance, often known as burial or funeral insurance, is a type of permanent life insurance policy, typically with a smaller death benefit. It is usually used to cover end-of-life costs like funeral expenses, medical bills, and related spending.

Things to Consider When Buying Life Insurance for Parents

Just like buying life insurance for yourself, there are considerations when buying insurance for your parents. Here are some important considerations that you should think about before making the decision:

Financial independence:

If your parents earn their own income or are otherwise financially independent due to government benefits for seniors or other means, they may not need life insurance. But if they have dependents who can’t earn money, insurance might be wise.

Life insurance cost:

Insurance protection can be expensive for the elderly and those with health conditions. Make sure the benefits of having life insurance outweigh its costs.

Insurance type:

Different people have different life insurance needs, so choose the policy type that benefits your parents the most. Generally, your parents are eligible for most types of life insurance recognised in Canada.

Health and age:

As your parents get older, life insurance will get more expensive. While there are options for senior life insurance protection, like simplified or guaranteed issue policies, they may be more expensive than other policy types.

Policy ownership:

Discuss with your parents to determine who holds the policy and pays for it. Make the decision based on a mutual decision between you and your parents.

One of the most important things to do before getting insurance for your parents is to discuss this beforehand. Agree on what kind of insurance to get and who pays the premiums. This way, you’ll prevent disputes and ensure that their life insurance policy can provide you and your parents peace of mind.

The below infographic shows the main reasons for and against buying life insurance for your parents.

Tips When Getting Life Insurance for Your Parents

Buying life insurance with your parents is similar to buying one for yourself. However, there may be some differences along the process, and it’s best to bring your parents into the conversation instead of making a one-sided decision. Here’s how you can bring them into the discussion:

Get your parents’ perspective:

Talk with your parents about your plans to buy life insurance for them and find out what they need from the policy, if they need one.

Offer insurance as a choice:

Remind them that life insurance is optional, not a requirement. This will ensure they don’t feel like they’re forced to be insured.

Choose the right framing:

Focus on what’s important for your family. For instance, they’re worried about leaving their family with debts when they pass, you can say that insurance can help them repay those debts.

Involve them:

Invite your parents to share their concerns about getting insured, and update them on every major step in your insurance research and purchase process.

Support their decisions:

Provide support and love whether or not they choose to get insured.

Below is the infographic explaining the best course of action if you decide to get life insurance for your parents.

Steps to buying life insurance for your parants

Key Advice From MyChoice

  • You can buy life insurance for your parents as long as you have their consent. You also need to prove insurable interest in your parents and have them meet the usual life insurance qualification criteria.
  • Life insurance for your parents can replace their income, pay for final expenses, repay debts, and protect your family business, among other uses.
  • You have multiple options for your parents’ life insurance policies like term, whole life, guaranteed issue, simplified issue, and final expense coverage.
  • You should discuss with your parents what type of life insurance is right for them and whether they need or want it.

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