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How to buy life insurance for your parents

A handy guide to buying life insurance for your parents.

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By

Gary Ross Hunter

Updated

Fact checked

Buying life insurance for your parents can provide peace of mind and financial security for both you and your folks. So long as you follow the proper steps, you should have no bother taking out a policy on their behalf.

Can I buy life insurance for my parents?

Yes, but there are a couple of things that you'll need to do.

  • Get their consent. You can't buy life insurance for anyone without their knowledge; that includes your parents. You'll need to get their written consent when you buy a policy for them.
  • Prove that you have an "insurable interest". To be able to get life insurance for your parents, you need to be able to show that their death would cause you to suffer financially. In other words, you need to show that there are debts and expenses you'd need to pay if they died.

How to buy a life insurance policy for your parents

Follow these steps when buying a life insurance policy for your parents.

  • Calculate how much money you will need. You need to work out how much you'll need to pay off all their debts. This means you'll need to add up their debts, including any mortgages and loans, plus find out their assets and savings. You can use our life insurance calculator to help you get started.
  • Choose between term and whole life insurance. Term lasts a set period of time and so is almost always cheaper, while whole life insurance provides lifelong coverage. If you want to guarantee that their debts will be cleared by a policy, then whole life insurance may be a better option in this situation.
  • Shop around. This is the part we've made simple. You can compare life insurance policies for seniors side by side here to get a clear sense of how brands stack up against one another.
  • Select the beneficiaries. This is the person or persons who receive the payout. You need to get your parents' final say on the beneficiaries, though presumably it will be you.
  • Apply. Once you've figured out all the above details, you can apply for a life insurance policy on your parents' behalf. Be sure to submit everything that the insurer asks for.

Can I still buy a policy for my parents if they're in poor health?

Yes, but it can make things a little trickier. If they're in poor health, some insurers will refuse to cover them, so you may need to get life insurance through a provider that specialises in high-risk individuals.

If you're eager to get cover then look at guaranteed insurance, which doesn't require any medical questions. Be warned though, it can be very expensive when compared to other policies.

Medical conditions that can make it difficult, but not impossible, to get life insurance include:

  • Cancer
  • Kidney or liver disease
  • Heart attacks
  • Strokes
  • Sleep apnea
  • High blood pressure and high cholesterol

Why consider taking out a life insurance policy for your parents?

There are lots of reasons why you should seriously consider taking out a life insurance policy for your folks. Here are just a few:

  • Debt. Any debt that your parents have will be passed on to you when they die. This includes everything from car loan payments to credit card bills.
  • Provides you and your parents with peace of mind. Your parents don't want to leave you with any financial burdens when they pass away, and you don't want to deal with it either. Life insurance provides peace of mind knowing that finances are the last thing you'll have to think about when the day comes.
  • Paying for the funeral. Funerals can cost anywhere from around $4,000 to over $15,000 in Australia which is not cheap. A policy for your parents can cover that as an add on, so keep an eye out for it when you're shopping around.
  • Inheritance. All parents want to give their kids a better life than they had. A life insurance policy is a nice way for them to ensure that they leave you with something.

Are there any exclusions I need to be aware of?

There are general exclusions, which apply to all policies, and there are also often specific exclusions that apply to individual policies.

General exclusions include:
  • Suicide and self-harm are not covered within the first 13 months of coverage.
  • Criminal activity, for example, any injuries or death which occur during you doing anything illegal.
  • Recklessness, negligence and unreasonable behaviour. For example, unsafe driving, failure to take proper safety precautions or not seeking medical attention for a clear health issue.
Specific exclusions can include:
  • No cover for pre-existing conditions. This can include ongoing health conditions, such as diabetes, or an illness which might recur, like cancer. In some cases, this condition may be specifically excluded from cover.

Bottom Line

Losing your parents is tough no matter how old you are. Being burdened with debts, loans and expenses is something you can do without. Luckily, you can take care of the financial side of things by buying life insurance for your parents.

Compare direct life insurance options

Updated regularly
Name Product Maximum Cover Maximum Entry Age Terminal Illness Benefit Claims Acceptance Rate Average Claim Time Sum Insured
NobleOak Life Insurance
Finder Award
NobleOak Life Insurance
$25,000,000
74
$25,000,000
96.90%
1.1 months
$24,483 million
Our verdict: Finder Life Insurance Award winner for the last 5 years in a row. Good value for money, simple application process and a high claims acceptance rate.

⭐ Current offer: Get one month free for a limited time - apply by 21 December 2023. Offer T&Cs on insurer website apply.
Get Quote
View details
TAL Accelerated Protection Life Insurance
Finder AwardBonus
TAL Accelerated Protection Life Insurance
No set limit
73
Not stated
Data not available
1 months
$249,285 million
Our verdict: One of Australia's leading life insurers. Automatically includes child critical illness cover. Plus, it comes with a level premium option (e.g. costs remain similar as you get older).

⭐ Current offer: Get up to 15% off your TAL Life, Trauma or TPD insurance policy for life - if you have a Body Mass Index (BMI) between 19 and 28 at the time of your application. Offer T&Cs on insurer website apply.
Get Quote
View details
Medibank Life Insurance
Medibank Life Insurance
$2,500,000
70
$2,500,000
Data not available
Data not available
Data not available
Our verdict: Medibank offers a higher payout limit ($2.5 million) than 15 other providers. Get a 10% discount if you're already a Medibank Health Insurance member.
Get Quote
View details
ahm Life Insurance
ahm Life Insurance
$1,500,000
55
$1,500,000
Data not available
Data not available
Data not available
Our verdict: ahm offers a simple application process. You can be approved online or over the phone. There are no medical or blood tests required.
Get Quote
View details
HCF Life Protect Insurance
HCF Life Protect Insurance
$1,500,000
65
$1,500,000
Data not available
Data not available
Data not available
Our verdict: Similar cover to other insurers ($1.5 million). A good discount for HCF members of 10% and an easy initial quote process.

⭐ Current offer: Eligible HCF Members receive 10% premium discount and HCF Thank You rewards.
View details
RAC Life Insurance
Bonus
RAC Life Insurance
$25,000,000
74
$25,000,000
96.90%
1.1 months
$24,483 million
Our verdict: RAC’s maximum death cover limit of $25 million is one of the highest limits you’ll find, including $5 million in TPD insurance. You can get an online quote, but you’ll need to call RAC to get trauma cover. Benefit from added peace of mind with fully underwritten insurance.

Get Quote
View details
Real Family Life Cover
Bonus
Real Family Life Cover
$1,000,000
64
$1,000,000
88.90%
2.4 months
$53,238 million
Our verdict: The application is simple; it can be done with 1 phone call and there are no medical exams. But households with larger debts may need more than a $1 million payout.

⭐ Current offer: Get back 10% of the premiums you’ve paid after 1 year.
Get Quote
View details
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