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If you have an insurable interest in your grandmother, you may be able to get a life insurance policy on her. An insurable interest means that you are dependent on her financially.
In other words, if she were to die, it would cause the beneficiary of the policy financial hardship.
If you are living with your grandmother, and she is working to pay the mortgage, you may get mortgage insurance to pay off the home, in the event she dies.
If you would be destitute if she died, you can likely get a life insurance policy on her.
The main issue is that you must depend on her income for your well-being.
If you have no insurable interest in your grandmother, you will not be able to get a life insurance policy on her.
The main reason for a life insurance policy is to replace the lost income of the insured. If your grandmother is still working and has dependents, her income can be insured.
However, you cannot buy a life insurance policy to make a profit off of another person’s death. You grandmother must be worth more to you alive than dead.
If you are not able to work and she takes care of you financially, you have an insurable interest in her.
If she does not work, you cannot buy life insurance to make money when she dies.
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Other Things to Consider About Insuring Your Grandmother
- Your grandmother will have to meet the requirements for insurability. She must be able to pass the health exam for coverage.
- Life insurance premiums go up as a person’s age increases, so make sure the premiums are affordable.
- You need to consider whether the excess premiums, justify the payoff.
- If your grandmother has health problems, it may be difficult or expensive to qualify for coverage.
She Must Approve of the Policy
You cannot apply for a life insurance policy on her, without her knowledge. She must sign the application for coverage and give her permission for her medical records to be released to the insurer.
She may have to take a medical exam as well. Applying for a life insurance policy on your grandmother, and forging her signature is illegal.
She must sign the application herself and understand what she is doing.
Leaving a Legacy
If your grandmother wants to leave a legacy to you, grandchildren or other family members, she can buy a life insurance policy for herself.
The rule is, that everyone has an insurable interest in themselves.She can purchase a policy that she could designate as a college fund for a grandchild.
In this situation, she would apply for the policy herself, and name whoever she wants to as beneficiary,
Age Limits on Policies
Many insurance companies have an age limit on when they will no longer issue an insurance policy on a person. Many stop issuing term policies at age 75.
If you have to apply for a whole life policy, you will pay a lot more for it, because it will build a cash value.
Think about whether you can afford to pay the higher premium for a number of years. If you are concerned that the policy may lapse, because it is too expensive, it is not worth buying in the first place.
If you are simply looking for life insurance to cover medical bills and fees associated with burial expenses, some companies offer term insurance policies or whole life policies.
A term insurance policy must be paid monthly or annually, and lasts for a set number of years, after which it may or may not be able to be renewed.
A whole life policy can be paid monthly or annually and last for as long as you live, and pay the premiums of course. It is for a lower amount, usually from $5000 to $15,000.
These plans last for the rest of the insured’s life. Since the death benefits are low, many of these plans are affordable.
There are several insurance companies that offer them. You should compare the costs of several different companies to get the best price.
There are several types of burial policies. They include:
- Level Benefit – Pays immediately after death.
- Modified Benefit – Pays out a certain amount of death benefit, which usually increases in amount each year, plus a percentage of premiums may be returned. The waiting period for full payment may be several years.
- Graded Benefit – The death benefit is paid out over several years after the death.
If your grandmother is older than 75 or 80, and you want to simply have her funeral expenses covered, you may want to consider a pre-paid life insurance policy. This is where one payment is made upfront to cover the policy.
The policy may be for a one year period or even longer. It is for a lower amount, usually from $5000 to $10,000.
It is typically linked to funeral directors who will place the money in trust so when they are needed, the funeral expenses are paid in full. Funerals can be planned in advance and costs may be locked in at a lower rate.
Most policies are refundable if the policyholder wants to make changes.
Many insurance companies sell these types of policies. Since the money is paid upfront for at least a year anyone can qualify.
In conclusion, if your grandmother is younger than 75 years old, you may be able to get life insurance coverage for her.
You must be able to prove an insurable interest in her unless you are simply buying burial insurance.
If she wants to leave a legacy, she can apply for her own policy and name you or anyone she wishes as the beneficiary.
Your grandmother must be aware of the policy and approve of it. She will have to sign the application. Costs will be high for any life insurance on a senior. Depending on the type and amount of the policy, she may have to prove she is insurable.
If your grandmother cannot qualify for a standard life insurance policy, consider getting a pre-paid policy. At least you will have her final expenses covered.
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