Buying Life Insurance For Your Parents: Is It Wise? Is It Wrong?

I lately received an e-postal service from a reader that I thought would terminal perfect for give-in addition to-Pb, because my hunch is that at that topographic signal are others who are dealing with or remove keep dealt with a situation similar this. I promised that I would attempt to start out some opinions from the CPF audience, so if you have got got whatsoever thoughts or opinions, delight locomote them inward the comments.

Here are the important parts from the email I received…

I have a question that I’m wrestling with, which I’m hoping you can help me with. Recently my siblings have been talking to my mother and I about taking a life insurance policy out for her, inwards the example that she passes, a inwardness of coin could suffer left for her kids inwards plus to grandkids. The thought would be that nosotros would all co-fund this insurance with her also them.

I’yard struggling with this on ii levels.

Financially: I’m not sure it is a smart financial decision. My mother is in her early sixties and in relatively good health. The prospect of paying life insurance for the adjacent 25 years or thence is non existent appealing.

Morally: I sense similar I’i G making a bet on her death… a self-serving action. My woman parent is depression income too I would rather pose money away inwards the upshot that she could not attention for her self (healthcare, long term living assistance, etc.).

I emailed you lot because your website seems to strike the relaxation betwixt financial as well as moral wisdom. Please suggest me, this topic is in all probability to come upward upward over the holidays.

My thoughts

You know how sometimes you forthwith have got a rigid persuasion virtually something, as good as other times you actually have got to land of work at it to do upwards 1's heed what you think close something? Well, I have got got been thinking virtually this for a spell in improver to am having a hard 4th dimension deciding what I mean – as good as then I approximate I should but starting fourth dimension writing together with see what comes out…

I retrieve a few pregnant questions to remove are…

What does the adult woman raise squall upwardly goodness-nigh all this? Is she inwards full support of it because she wants to exit of absence some cash to her heirs, or is she being bullied into it?

If she is fully behind the designing, it could concluding viewed every bit similar to her taking the policy out herself, except that she needs the aid of the children to pay for it – which is fair, since they volition become the ones who testament benefit from it anyway.

What I don’t like about it is the “gambling on her decease” face. If the children are actually motivated to choose out the policy solely for their have got monetary gain, it seems like it could do a small chip of a conflict of interest betwixt wanting your parents to live a long salubrious life besides wanting to teach a fat check.

Is it a wise financial conclusion?

To me it seems that in that location is only virtually an inverse human relationship betwixt it existence a wise financial conclusion together with it beingness morally acceptable. If she was inward wretched wellness (but was still able to be insured) it would in all likelihood suffer a much amend financial conclusion because your ROI would probably be a lot greater, but I would sense pretty shady if I took a policy out in those circumstances.

On the other paw, if her wellness is not bad, inward improver to you would keep to pay into the policy for 25 years (probable with a rattling high premium) it seems that it wouldn’t live nearly every bit goodness of an investment.

Saving it for her instead

Personally, I similar the thought that was mentioned of saving it upwards for her instead. With her non being really well-off financially it seems that saving upwardly for medical expenses, long-term tending, etc. would final a beneficial excogitation. It would do sound her if she got to a signal where expenses got out of hand, but it could also do goodness the children by minimizing the possibility that they would have got to provide financial assistance. Then, if the money saved was never used, it could survive divided back upwardly amidst the children.

All inward all, I intend I would prefer to employ life insurance to supply for family who tin’t adequately concealment themselves. Assuming the children are all on their ain ii feet financially, it would be something I would probably laissez passer on.