Can I Buy a Whole Life Policy For My Kids or My Parents?

You can buy a whole life policy for your children as soon as they are born, provided you had a healthy birth. You can buy it for your parents with their permission and insurable interest.

We’ll show you exactly how to do both right here.

 

Can You Buy Life Insurance For Your Parents?

It’s possible to purchase life insurance on behalf of your parents in Canada. However, you need to keep two things in mind:

  1. Permission — As we’ll detail later, you need your parents’ permission to get the policy.
  2. Insurable interest — You need this to take out a policy for someone else. Let’s look at this in more detail.

 

Understanding Insurable Interest

Having insurable interest means you expect to experience financial loss if the person passes away (in this case, your parents). If you’d gain from the loss, it could cause you to do the unthinkable out of greed.

You get automatic insurable interest in the lives of yourself and your spouse, children, employees, business partners, and grandchildren. But it’s not a guarantee when it comes to parents.

 

You’ll Need Your Parents’ Permission

If you don’t attain your parents’ consent, you can’t acquire life insurance for them. Why? Because the underwriting process requires them to answer medical questions accurately. Plus, they’ll likely need to pass an in-person health exam, which involves:

  • Taking their blood pressure
  • Measuring their height and weight

Without their consent and agreement to attend a medical check, you can’t obtain a life insurance policy.

 

Why Should You Buy Life Insurance For Your Parents?

Life insurance exists to pay for funerals, cover outstanding debts, and support dependent individuals. So, the reasons behind buying life insurance for your parents are the same reasons behind buying it for yourself.

Numerous situations make it more suitable for you to take out a policy for your parents rather than them buying one for themselves, such as:

  • Their income can’t handle the premium costs.
  • They run a family business that would impact your financial wellbeing when they die.
  • They have a small estate, meaning acquiring funeral costs through insurance is more realistic.
  • They have a sizeable estate that could incur a bunch of taxes.

 

What Type of Life Insurance Should You Purchase for Your Parents?

No one-size-fits-all answer applies here. Every family is different, and thus, the insurance policies needed differ too. Booking a consultation with Sim Gakhar ensures you make the right decisions.

Your parents’ ages and health status dictate the type of insurance available. Additionally, it might be worthwhile to consider purchasing option riders for them, like disability cover, terminal illness, and similar.

Regardless of the kind you buy for them, the premium will be higher than yours.

 

How to Get Life Insurance for Your Parents

It begins the same way as purchasing life insurance for yourself. Begin by looking at various life insurance quotes using your parents’ information and speaking to an advisor.

Once you’ve evaluated your options, you’ll have a clearer picture of how much it’ll cost — and, therefore, whether you can afford it.

 

Can You Buy Life Insurance For Your Children?

Okay, we’ve covered every angle of purchasing life insurance for your parents. So, it’s time we answer your next burning question — can you buy it for your kids?

The answer is yes! While it’s not the first thing your new-parent brain thinks about, it can save you a lot of extra financial pressure should your child become ill.

 

Is Buying Life Insurance For Your Children Mandatory in Canada?

No, it’s not mandatory. But acquiring a policy for your bundle of joy can make financial life easier should the unthinkable happen. Often, parents with sick children incur substantial financial losses, and while it won’t heal your heart, it can help you keep a roof over your head.

Purchasing life insurance for your baby becomes more reasonable when you consider the stats — every year, around 2,000 babies born in Canada pass away before they turn one year old. This mortality rate is the same as 55- to 60-year-olds who mostly have life insurance. With that in mind, insuring young children doesn’t seem so pointless.

 

When Can You Purchase Life insurance for Your Children?

Most Canadian insurers allow you to buy life insurance immediately as long as you have a healthy birth. However, others stipulate your baby must be at least 15 days old before they’ll insure them.

Throughout the application process, you need to answer questions about your child’s health. Some insurers require your little one to pass a medical exam before enacting the policy, so wait times vary drastically.

 

Your Children’s Coverage Options

You can purchase life insurance for your children in multiple ways. The main methods are as follows:

  • Stand-alone term renewable coverage — Here, you’re purchasing an entire policy for your child, which is renewable at various intervals.
  • Child term rider — Adding a child term rider to your life insurance policy is the cheapest and most popular way to cover your child. CTRs typically cover them until they reach adulthood (18 to 25).
  • Whole or universal insurance — Unless you have an ultra-high net worth, buying insurance in life for your children probably is the best option.

 

Children’s Life Insurance Providers

  • Foresters — You can add a child to your policy for free with Foresters once they’re at least 15 days old and passed a health check.
  • Manulife — This provider offers a child term rider for $2.50 a month for a $10,000 cover. When your child reaches 25 years old, you can change the coverage for 25 times the initial amount. Initially, your child needs to pass a health check. If they’re sick, Manulife may deny the rider.
  • Canada Life — For $4.50 per month, you can add a child term rider. Later in life, you can exchange it for $250,000 of cover.

 

Find The Right Life Insurance For Your Loved Ones with Sim Gakhar

The life insurance world is complex, especially when you’re purchasing a policy for someone else. But Sim Gakhar can help take the pressure off. Book a consultation now.

 

FAQs & Helpful Resources Regarding Whole Life Insurance