Funeral Insurance for Parents: Can You Buy a Policy on Mom or Dad?

Short answer: You can help buy funeral insurance for parents, but you need an insurable interest, and in New York your parent has to apply or consent in writing. Florida’s Department of Financial Services says anyone buying life insurance on another person’s life “must have an insurable interest at the time of purchase,” and New York law requires the insured to apply for or consent in writing to the policy, with exceptions only for spouses and young minors.

Can I buy life insurance on my parents?

Two rules come up when an adult child wants to insure a parent: insurable interest and consent.

Insurable interest. Florida’s Department of Financial Services (DFS) says, “Any person wishing to buy life insurance on another’s life must have an insurable interest at the time of purchase.” It describes insurable interest as the policyowner having “a reasonable expectation that he or she will benefit from the continued life and health of the insured.” New York’s insurance law, as quoted by the New York Department of Financial Services (NY DFS), says that for “persons closely related by blood or by law,” insurable interest means “a substantial interest engendered by love and affection.”

Consent. New York law says, “No contract of insurance upon the person shall be made or effectuated unless at or before the making of such contract” the insured applies for it or consents in writing. The only exceptions are a husband or wife insuring each other and insurance on certain minors. An adult child isn’t in either group. In a 2004 opinion, NY DFS’s Office of General Counsel concluded that a person who didn’t fit an exception was “prohibited from procuring a life insurance” policy on another adult “without his written consent.”

Rules differ by state, so ask the licensed agent or your state insurance department what applies where your parent lives. Either way, plan on your parent knowing about the policy and taking part in the application.

Who is the owner, insured, beneficiary and payer?

A burial or final expense policy has several roles, and different family members can fill them. Learn the product basics in What Is Final Expense Insurance?

Because the owner controls the policy, including the beneficiary, talk as a family about who should own it. Florida’s guide says ownership can be transferred or assigned by written request of the current owner, so ask the agent how that works with the company you choose.

What does my parent have to do?

1. Answer the application honestly. For policies that ask health questions, Florida’s guide warns, “If there are misstatements on the application your coverage could be jeopardized,” and an incorrect answer “could result in a claim being denied.” Let your parent answer the questions; don’t guess for them.
2. Sign or consent. In New York, the insured must apply for the policy or consent in writing. Ask the agent what your parent will need to sign in your state.
3. Consider a guaranteed issue option if health is a concern. Florida DFS says graded benefit whole life policies “may be referred to as Guaranteed Issue as very few applicants are excluded from obtaining coverage.” Florida’s guide adds that these policies are “often sold as a guaranteed issue policy through the mail or other media.”

Know the trade-off with graded and guaranteed issue plans. Florida DFS says, “During the first few years, the death benefit is equal to the premiums paid.” Florida’s guide says a graded policy “pays the full amount of your death benefit for accidental death” but “a much smaller amount for other causes of death in the first few years.” NY DFS says senior life (graded death benefit) plans provide “minimal whole life coverage without a medical examination” to eligible older applicants. In New York, these plans can be issued at ages 50 to 75, with a maximum issue amount of $25,000, and NY DFS says they are “usually more expensive than a fully underwritten policy if the person qualifies as a standard risk.” For more, see burial insurance with no waiting period.

What should we compare?

Florida’s guide says, “Shop around. Compare plans from more than one company.” Before you sign, size the coverage to real costs. Start with how much a funeral costs and price lists from funeral homes near your parent. Then compare:

• Coverage amount against what you expect the funeral to cost.
• Full benefit from day one or graded. Ask how long any graded period lasts and what it pays.
• Premiums that stay level. NY DFS says a non-participating whole life policy “will give you a level premium and face amount during your entire life.” Ask whether the premium can ever go up.
• Total cost over time. NAIC suggests asking “what might be the highest premium you’d have to pay to keep your coverage.”
• Licensing. The Texas Department of Insurance (TDI) says, “Make sure the agent and company are licensed to sell insurance.” Florida DFS says to “verify the license of the agent and the insurance company before you sign the application for a policy.”
• Existing coverage. NAIC says, “It’s important to compare your current policy with any new policy you might buy,” and not to cancel a current policy until a new one is in place. Ask your parent what coverage they already have.

How do we pay the premiums?

NAIC says, “Before you buy a life insurance policy, be sure you can pay the premiums.” Decide who is paying and set up a method you can keep up. Florida’s guide offers these payment rules:

• “Never pay cash and always make your check payable to the insurance company.”
• “Obtain a receipt for any payment you give the agent.”
• “Be sure that the premiums are within your ability to pay.”

If a payment is late, there’s a grace period. TDI says, “Most policies have a 31-day grace period after your premium’s due date,” and “You may pay the premium during the grace period with no interest charged and still have coverage.” Florida’s guide describes “A 30-day period in which you may pay an overdue premium while keeping your policy in force.” Ask the agent whether the company can send late-payment notices to you as well as your parent.

What if we change our minds?

Life insurance comes with a free-look period. TDI says, “Texas policies have a free-look period of at least 10 to 20 days,” and during it you can cancel for any reason and get a full refund. Florida DFS says that after a policy is delivered, “the policyowner has at least 14 days to review it.” Read the policy together with your parent as soon as it arrives.

Checklist: buying burial insurance for a parent

1. Talk with your parent first about their wishes, existing coverage and whether they want a policy.
2. Confirm your state’s rules on insurable interest and consent with the agent or your state insurance department.
3. Decide the roles: owner, beneficiary and who pays.
4. Get funeral price lists to size the coverage.
5. Get quotes from more than one company, including fully underwritten and guaranteed issue options if your parent qualifies.
6. Check the agent’s and company’s licenses.
7. Have your parent answer the health questions honestly and sign what’s required.
8. Set up payments you can keep up, with receipts.
9. Review the policy during the free-look period.
10. Tell the family where the policy is kept. NAIC advises, “Let your beneficiaries know about the policies.”

The bottom line

You can help buy funeral insurance for parents when you have an insurable interest, and in New York your parent must apply or consent in writing. Decide together who owns the policy, who pays and who is the beneficiary, compare full and graded benefits, and keep the premiums affordable.

If you’d like help comparing final expense options for your mom or dad, a licensed agent can walk you both through them. Here’s how calling RestAssured works.

RestAssured is not an insurance company or an insurance agency; we connect callers with independently licensed insurance agents.

Frequently asked questions

Can I buy life insurance on my parents?

You need an insurable interest: Florida’s Department of Financial Services says anyone buying life insurance on another’s life “must have an insurable interest at the time of purchase.” New York law also says the insured must apply for or consent in writing to the contract, with exceptions only for spouses and young minors, so your parent has to be part of the process there. Ask the agent what your state requires.

Can I buy funeral insurance for my parents without them knowing?

Not in New York. The New York DFS Office of General Counsel explains that state law bars a life insurance contract unless the insured applies for it or consents in writing, except between spouses and for certain minors. Ask your state insurance department or a licensed agent what applies where your parent lives.

Who should be the owner of a burial policy on a parent?

Florida’s consumer guide says the owner controls “all rights, benefits, and privileges under a policy” and NAIC says the policy owner can change beneficiaries at no cost. Talk with your parent about who should own the policy, who pays the premiums and who is named as beneficiary before you apply.

Can my elderly parent get burial insurance without health questions?

Some policies are sold that way: Florida’s Department of Financial Services says graded benefit whole life policies “may be referred to as Guaranteed Issue as very few applicants are excluded from obtaining coverage.” The trade-off is that during the first few years, Florida says the death benefit is equal to the premiums paid.

How much is funeral insurance for parents?

It depends on your parent’s age, health and the amount of coverage, so get quotes from more than one company. NAIC says “Before you buy a life insurance policy, be sure you can pay the premiums,” and New York DFS says senior life plans are usually more expensive than a fully underwritten policy if the person qualifies as a standard risk.

Sources

• New York DFS: OGC Opinion No. 04-03-19, Procuring Life Insurance Without Written Consent
• Florida Department of Financial Services: Life Insurance Overview
• Florida Department of Financial Services: Life Insurance, a Guide for Consumers
• New York Department of Financial Services: Types of life insurance policies
• Texas Department of Insurance: Life insurance guide
• NAIC: Life Insurance Buyer's Guide
• NAIC: What Should I Know About Life Insurance Beneficiaries?

This article is for general education. Policy features, prices and eligibility vary by insurance company and state; your agent will explain the specific terms of any policy before you apply.