A Question for You Life Experts

[Franz Kafka]

A senior parent lives with an adult child. The child pays all the bills for the parent and the parents uses SS checks for personal spending.

My question is - if the child wishes to take out a policy on the parent to potentially maximize the return on the paid premiums, does that constitute a legitimate insurable interest? I'm thinking that it does not.

(The only legitimate reason for coverage I can think of is final expense but the particular carrier I'm thinking of "doesn't do final expense").

 

[STIBROKER]

My question is - if the child wishes to take out a policy on the parent to potentially maximize the return on the paid premiums, does that constitute a legitimate insurable interest?

you are correct.....................

 

[VolAgent]

A senior parent lives with an adult child. The child pays all the bills for the parent and the parents uses SS checks for personal spending.

My question is - if the child wishes to take out a policy on the parent to potentially maximize the return on the paid premiums, does that constitute a legitimate insurable interest? I'm thinking that it does not.

(The only legitimate reason for coverage I can think of is final expense but the particular carrier I'm thinking of "doesn't do final expense").

Children are generally assumed to have an insurable interest on the parents.

What you're struggling with is the purpose of the insurance. Are there any debts, maybe income replacement or charitable gifting planned? Maybe cash accumulation or estate creation is allowed?

 

[Mark]

I have life insurance on all my parents and they dont live with me.

 

[DHK]

This is the same principle as a funded salary continuation plan reimbursed back with life insurance proceeds to the company.

The adult child is providing for the Senior parent. The child could take out a policy to provide "reimbursement of support costs".

 

[dgoldenz]

The adult child is providing for the Senior parent. The child could take out a policy to provide "reimbursement of support costs".

x2

Nothing that doesn't guarantee child won't get stuck with large bills for healthcare or other needs. The life insurance proceeds can be used to get that money back.

 

[VolAgent]

This is the same principle as a funded salary continuation plan reimbursed back with life insurance proceeds to the company.

The adult child is providing for the Senior parent. The child could take out a policy to provide "reimbursement of support costs".

I'd avoid getting too cute with this. You want something that sails right on through, not something that draws a second look.

 

[DHK]

Children buy life insurance on parents all the time.

My explanation was for the OP understanding and justification, not for an underwriter.

 

[VolAgent]

Children buy life insurance on parents all the time.

My explanation was for the OP understanding and justification, not for an underwriter.

Yes they do, and I was talking about for underwriter. Keep it simple for them.

 

[NinjaNic]

underwriters will approve a lot of financial cases as long as they have "something to put in the file" for reinsurers or stockholders... Write a cover letter and break down how you determined the need. The elderly parent does housework, child care, runs errands, will have a funeral cost of x, a daily drain of Y and the monies used to fund should not be from the owner of the policy/kids. explain it and it will get approved, but don't go crazy and asked for hundreds of thousands because they can "afford it."