Can You Take Life Insurance Out on a Parent?

Short‑Answer

Yes, you can take life insurance on a parent, but only if the parent is the insured person. A child cannot name a parent as the insured on a policy. Instead, the parent must purchase a policy in their own name and designate the child as the beneficiary, or the child can purchase a policy for the parent with the parent as the insured.

Policy Types for Parents

There are two main categories of life insurance that parents can consider: term and permanent. Term policies offer coverage for a fixed period, such as 10, 20, or 30 years, and are generally less expensive. Permanent policies, including whole life and universal life, provide lifelong coverage and build cash value over time.

Eligibility and Underwriting

Insurers require the insured to be a legal adult and to disclose health information. For parents, age is a critical factor: the older the parent, the higher the premiums and the stricter the underwriting. Many carriers offer "guaranteed issue" or "no‑question" policies for older applicants, but these typically have lower face amounts and higher costs.

Beneficiary Designation

The policy holder can name any adult or entity as the beneficiary. If the goal is to provide financial support to the parent, the child can be named as the primary beneficiary, ensuring the proceeds are used for the parent's care or expenses. Alternatively, the parent can name a trust or charitable organization.

Cost Considerations

Premiums rise with age, health status, and coverage amount. For a 70‑year‑old parent, term premiums might start around $200–$400 per month for a $500,000 policy, while whole life could exceed $1,000 per month. Comparing rates from multiple carriers and considering riders—such as accelerated death benefit or disability—helps manage costs.

Legal and Tax Implications

Life insurance proceeds are typically tax‑free to the beneficiary. However, if the policy is owned by a trust or if the insured is a minor, different rules apply. Consulting a financial planner or tax advisor ensures compliance with estate planning goals.

When to Act

If a parent's health is stable and the objective is to secure future financial protection, purchasing a policy early—ideally before age 65—offers the best rates. Delaying until later ages can lock in higher premiums or limit coverage options.