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This Article Will Cover The Process In Which You Can Purchase Life Insurance For A Grown Child
Most likely you’re here reading this article today because you’re concerned about having life insurance protection on your grown child. You don’t want them to pass away and leave behind final expenses that you, their spouse, or their children would be responsible for.
You want to help them out by purchasing a life insurance product to give them coverage should they happen to pass away earlier than expected. This article will detail a nine step process to follow in order to qualify your grown child for life insurance coverage.
My goal is to help you totally understand the process so that you can get the best kind of life insurance coverage in place for your son or daughter.
NOTE: Would you prefer me to present this information to you in video format? Watch the video below for the complete presentation. Enjoy!
The Topics We’ll Discuss Are As Follows:
- Establish Why Life Insurance Is Important
- Gain Consent
- Quantify Your Goals
- Find A Broker
- Select The Policy With The Best Underwriting Outcome Potential
- Decide Whether Or Not To Take An Exam
- Carefully Determine The Beneficiary Arrangement
- Create A “Plan B” In Case You Are Declined, Rated Up, Or Cannot Find Sufficient Coverage
- Await The Decision
1st Establish why life insurance is important
It’s really important during the process of looking for life insurance for a grown child that you really define and solidify in your mind why you want to purchase life insurance coverage. There are all sorts of reasons behind why a parent would be interested in purchasing life insurance for a grown child. Typically it stems around one of the following reasons:
Taking care of final expenses.
Maybe you’re concerned about your child being in a particular situation or you worry about the potential risk of them dying and leaving behind a final burial cost that you will have to shoulder. Qualifying and getting a life insurance plan helps solve this financial risk to you and your child’s family and alleviates any sort of debts that may be accrued.
Family left behind.
Maybe another thought that’s run through your head is that if your grown son or daughter passes away and leaves behind children without a father or mother, those children would face financial difficulty. Taking out a life insurance policy on your grown child can not only cover expenses, but also ensure your grandkid’s financial welfare is taken care of.
2nd Gain consent
One of the difficulties of purchasing life insurance on somebody else that’s not directly dependent upon you, such as an adolescent child or a spouse, is that you cannot qualify someone for life insurance without gaining their prior approval. Why is this the case?
When you apply for life insurance coverage, you also give consent for the life insurance company to access medical records. According to HIPPA rules, adults have protection over the privacy of their own health information. This means parents cannot give consent to health records if their children are grown without first gaining the consent of the child.
You as the parent do have the ability, with the child’s consent of course, to be the payer, or owner, of the policy. This means you can determine as the person in charge of the policy who the beneficiary is and what the details of the policy are.
Just keep in mind that before you attempt to take a life insurance policy out on somebody, that you always have a discussion with them first as to what you’re thinking about doing, what you’d like to accomplish, and the reasons why you want to get coverage for them.
As an agent who has worked in the insurance business for many years, I have witnessed situations where the child got spooked by the parent trying to insure them without their permission. There may be conflict in the relationship and understandably the child views this move as highly suspicious, even if the intentions are good. So it’s important to have this conversation in advance of trying to take out life insurance on a grown child.
3rd Quantify your goals
We’ve established why it’s important to buy life insurance. My experience is that most parents buy life insurance on their grown children because they want to take care of final expenses if they happen to die earlier than expected or they want to help their surviving kids and spouse.
The next step in this process is to take those reasons and further clarify the amount of coverage necessary to take care of that need. Let me give you an example.
If your goal is to cover your grown child with enough coverage to pay for a burial or cremation, approximately $10,000 to $15,000 in life insurance coverage is sufficient to take care of either of those costs.
You can certainly opt for more coverage for final expenses if you wish. Given the fact that the cost of living continues to go up, the cost of burial is also increasing, so this isn’t a bad idea. Many parents go with an amount between $10,000, up to a maximum of $25,000.
If the specific goal is to take care of final expenses, this is something we can help you with at Buy Life Insurance for Burial. We work with the most competitive burial final expense insurance companies. We can give you a good quote for life insurance coverage that will help you accomplish the goals that you have in mind.
If your goal is income replacement, generally speaking it’s best to have 10 times your income in a life insurance policy, so if your son or daughter makes $30,000 a year a $300,000 life insurance plan would do a good job of taking care of most of the debts and obligations that your son or daughter would leave behind to their family.
4th Find a broker
This is one of the most important steps you can take in the process of buying life insurance for a grown child. A broker is in the unique position of being able to offer a multitude of life insurance companies to their client so that they can shop around to find the best price and coverage.
If you’re like most of my clients, you don’t want to pay more for your life insurance coverage than you have to. You want to make sure you get the best deal, as well as great coverage, for your grown child.
Captive agents are the opposite of a broker. A captive agent only works with one life insurance company and the problem here is that you’re limited severely on options and coverage, especially if your son or daughter smokes, has had health issues, or has a weight problem.
Some life insurance companies are more strict about certain health ailments and lifestyle choices, which may end up causing your rates to be much higher than expected or for your child to even potentially be declined.
5th Select the policy with the best underwriting outcome potential
One of the advantages of working with a broker is that they can literally go to each life insurance company, talk with the underwriters, and establish who is going to offer the best product based on your grown child’s unique health and lifestyle profile.The reason we do this is because we want to give your grown child the best chance of getting insured at the best price.
Once we have your son or daughter’s information, we find the top three companies that will provide the best pricing and coverage and then explain each plan to you to see which one is going to be the best overall choice.
6th Decide whether or not to take an exam
Deciding whether or not to take an exam can be a little bit tricky. Luckily an exam isn’t necessarily required.
Exams generally require the following:
- Blood withdrawal
- Blood pressure check
- General questionnaire
All of this is designed to give the most accurate records to the life insurance underwriters. Ultimately, the decision is up to your child. An exam can add an extra layer of complexity to the application process. Sometimes grown adults don’t want to do an exam, and other times they are willing to do the exam but don’t follow up with setting up an exam time, so it doesn’t get taken care of.
This is where a non-medical life insurance policy comes in handy and probably is more sensible in a situation where the parent is buying the life insurance on a grown child. It especially makes sense to do a non-medical application if the life insurance policy is under $500,000 in coverage, because an exam is unlikely to result in a substantially lower premium at that amount of coverage.
Though an exam may save you an extra $5 to $10 a month, some parents may find getting their grown child to complete an exam, especially if they’re out of state and hard to reach, too much of a hassle to make it worth the effort. That’s why I would recommend looking at a non-medical application where the exam isn’t necessary.
Alternatively, if you’re looking for a final expense life insurance plan, the good news is that most of those types of plans do not require any sort of exam, though they may require your child’s signature to authorize the application and the medical record search. They may also require a phone interview, but the process is much less complex than it would be with an exam.
Ultimately, my goals are to get you the best price and coverage as soon as possible. Sometimes taking the easier route to reach those goals just makes more sense.
7th Carefully determine the beneficiary arrangement
Since you’re most likely going to pay for life insurance on your grown child, it’s likely that you will be the beneficiary. That’s totally fine. However, you may want to name other people as beneficiaries as well, whether that’s your child’s spouse or children. Keep in mind, circumstances change.
One thing I do always recommend to my clients is that it’s important to look at your life insurance every year or two and update the beneficiary information to make sure it’s still relevant so that money will go to the intended parties.
I have encountered circumstances where people have died and their ex spouse was still their beneficiary though they had remarried. Unfortunately, that money would still go to the ex spouse, even if that wasn’t your child’s final wish, if the life insurance beneficiary information wasn’t updated prior to their death.
8th Create a “plan B” in case you are declined, rated up, or cannot find sufficient coverage
There are a number of reasons why you should always have a plan b when you apply for life insurance. If your child has health problems, has a criminal record, misdemeanours or traffic issues you may run into problems getting their application approved.
Think about the worst case scenario and have a backup plan in place. If you don’t, your more likely to simply give up if you run into any obstacles during the application process. And giving up doesn’t solve the problem.
9th Await the decision
If you apply for a final expense life insurance plan for your grown child, it’s likely you’ll get a decision same day or within the next day or two.
If you go the route of a non-medical life insurance plan to replace his or her income, it’s likely going to take somewhere between several days to several weeks, depending on what information is requested, before you are given a decision. Either way, be patient. Odds are you will get a positive result and can gain peace of mind in knowing your grown child is covered.