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Buying Life Insurance for Grandparents

Updated
Christy Bieber
By: Christy Bieber

Our Insurance Expert

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Life insurance policies can be an important purchase for many people. But is it possible to buy life insurance for grandparents? The answer depends on the circumstances, as this guide will explain.

Can you get a life insurance policy for your grandparents?

Most people purchase life insurance for themselves. But if you're wondering if it is possible to buy life insurance for Grandma and Grandpa, you aren't alone.

Sometimes, consumers can purchase a policy to insure another person's life. This could include buying life insurance for grandparents. There are, however, rules regarding when a person can get coverage on someone else. Anyone buying insurance for another person must have their consent. The person buying coverage also must have an insurable interest in the person who will be covered.

In most cases, life insurers also consider age and health status before issuing policies. When buying life insurance for grandparents with pre-existing medical conditions or who are of advanced age, limited policy options may be available.

How to buy life insurance for your grandparents

To buy life insurance coverage for grandparents, certain requirements must be met. Here are the two key factors that determine if it is possible to get a policy.

The first and most important consideration is that the person whose life will be insured must consent. So, say someone decides, "I want to buy life insurance for my grandma." The person buying the policy would need to get Grandma's permission. Grandma would also need to be willing to provide details about her medical history. And, in many cases, the insurer would require her to go through a medical exam.

You need valid reasons to justify the policy amount

Life insurers also require an insurable interest before allowing someone to buy life insurance for grandparents. This means that the person buying coverage must stand to experience financial loss or loss of services if the grandparent who the policy insures passes.

Life insurance is not meant to make people rich. The death benefit is intended to provide a replacement for income or services lost due to an untimely death. As a result, an insurer will only allow a policy to be taken out to cover actual losses. It may make sense to buy a small life insurance policy for grandparents to pay for their funeral costs, for example. But buying a $1 million policy on a grandparent who is not providing any financial support probably would not be allowed.

What type of life insurance policy should you buy for your grandparents?

There are many kinds of coverage available from the top senior life insurance companies. However, the most common types of life insurance policies for grandparents include the following options.

Term life insurance

A term life insurance policy offers coverage for a set period of time. For example, the coverage term might last 10 years, 20 years, or some other specific duration. If the covered person dies while the policy is in effect, the death benefit pays out.

Term life insurance is more affordable than whole life. And it's all the coverage most people need, since generally they stop earning income and supporting others at some point during their lifetimes.

It is important to be aware, though, that most insurers selling term policies have upper age limits for whom they will issue coverage. For example, it may only be possible to get coverage on someone up to age 80, 85, or 90 depending on the insurer. Term life insurers generally also require the covered person to undergo a medical exam and provide a detailed health history. Grandparents with pre-existing conditions may not qualify for coverage.

Whole life insurance

Whole life insurance is permanent coverage that remains in effect indefinitely. It's more expensive and has an investment component. Most people will not want to buy whole life insurance for grandparents because of the high costs and the fact that other investments typically produce better returns.

Like term life insurers, whole life insurers also typically require a medical exam, want a detailed health history, and won't issue coverage to people who are very old or very sick.

Guaranteed issue life insurance

Guaranteed issue life insurance coverage can be a good option for those buying life insurance for grandparents who have some medical issues. This does not require an exam or health history. Grandparents still must consent to the purchase of a policy, though.

Guaranteed issue plans come with lower death benefit limits. And there's generally a waiting period before the full death benefit pays out. Be sure to consider the health status of the grandparents who will be covered before buying this kind of policy.

Final expense insurance

Final expense insurance is another option for buying life insurance for grandparents. This kind of coverage is intended to pay funeral expenses and perhaps provide a little extra money for loved ones to cover other costs after a death. These policies are usually guaranteed to be issued, but coverage limits are low and there may also be a waiting period.

FAQs

  • It is not possible to buy life insurance on your grandmother or on any other person without them knowing. Consumers must have consent to buy life insurance on another person. The person whose life will be insured must provide medical information and may need to undergo an exam, in addition to providing consent.

  • To get life insurance on a relative, it is necessary to have the consent of the person whose life the policy will cover. The person buying the policy must also have an insurable interest in the life of the person who will be insured. That means they must know the person and stand to face financial or other losses if the covered person passes away.

  • It is generally not possible to buy life insurance for someone who is dying. Life insurers will ask about medical history and will often require an exam before offering coverage. An insurer would deny someone with a terminal illness because the chances of a claim payout are too high.

    There are guaranteed issue policies that can be purchased without a medical exam and that are available regardless of health issues. However, there are waiting periods for these policies before a death benefit will be paid. If someone is dying, it may not be smart to buy coverage on them if they will not outlive the waiting period before the full death benefit becomes available.

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