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Ask Dave

Discussion with mom and dad

Cherie calls in for her boyfriend, who is wondering if he should buy life insurance for his mom and dad. Dave says the idea is not a good long-term plan, and he gives some additional advice for this situation.

QUESTION: Cherie’s boyfriend wonders if he should buy life insurance for his parents. They’re both in their seventies, and they’re no longer married to each other. His mom is disabled and remarried, and she doesn’t have any life insurance coverage. The only coverage his dad might have would be through his employer. Cherie says her boyfriend is afraid he would have to pay funeral expenses if one of them died, and apparently he’s not in good enough financial shape to do that.

ANSWER: Yeah, if it’s furnished by his work, then when he stops working he probably won’t have life insurance anymore. If he wanted to buy a small policy, that’s fine, but it’s going to be very expensive at their age. You’d have to get them to sign off on it, and they have to be healthy enough to get the policy issued.

I wouldn’t do that as a long-term plan, though. As a long-term plan, I’d tell your boyfriend that he needs to build up his own wealth. If he had like $20,000 in savings—in his emergency fund—sadly, that’s enough to bury two people. You can do a really good funeral for $7,000 to $10,000 when you’re paying for someone else’s funeral.

The other thing I’d do is I’d have a discussion with mom as to whether or not stepdaddy has the money to bury his wife. That’s his primary responsibility, instead of her son having to pay for it. Then, he should have a discussion with his dad. If he’s got insurance through work, and the stepdad is ready to pay for his mom’s burial, then I wouldn’t buy insurance on them. They’re covered for today.

I wouldn’t do it unless they don’t have it covered. Even then, I’d prefer you just cover it with cash, because all we’re talking about then is just enough to cover burial costs. A modest, economy-type funeral is what we’re talking about, because that’s the situation we’re in. It doesn’t look like anyone’s a multimillionaire here.

Nothing needs to be elaborate—that’s my point. Not that you need to be elaborate, anyway, with this kind of thing. You really don’t.