Life insurance on parents?

[IceBoy]

Hi All,

This may sound like a strange question but can I take out life insurance on my parents? I would pay all the premiums and the lump sum would be paid to me.

We have started to think about estate planning and my dad posed the question to me, to help with inheritance tax, funeral costs, etc.

I thought it was a great idea but he is 65 in good health....but the premiums might be expensive if he lives to 100 LOL !!

IceBoy

[Orchid1]

I don't think you can.

I thought you could only have your own life as insurable interest?

This was to stop people in ye olden days taking out expensive policies on strangers then bumping them off in mysterious accidents to collect payment.

[dartissimus]

Whole of Life Insurance ?

Why not take out an endowment in their name, with you as beneficiary.

Remember, all insurance is a gamble and the insurance companies are more expert than you.

Two certainties in life : Death and the Inland Revenue.

[akirk]

Have a look into it a bit more...

2 basic conditions for life insurance:
- person being insured must give permission
- there must be an insurable interest

so insurance for husband / wife - there is a potential loss of income on death = insurable interest
if your parents were for example supporting you financially = insurable interest
your company can also do keyman type of insurance for key staff - could your parents be directors of your business?

also, life insurance can be sold - so potentially your parents could take out their own insurance, and then sell it to you - or they could take out their own insurance with you as the beneficiary and you could work out how that is paid for separately...

it is certainly not uncommon to use insurance for death duties / IHT but usually taken out by person who would die

not an expert, but I think it is worth exploring more

[Happy Jim]

Your dad takes out the insurance and pays for it. Separately you give your dad some money.

Either whole of life (expensive) or term insurance (cheaper) written into trust (to go to you on his death) means that the insurance money isn't added to his estate compounding the IHT liability.

Rgds

Jim

[J012E]

The quick answer is yes this can be done but should only be done in certain situations.

Inheritance tax mitigation is a very common area where beneficiaries pay the premiums on whole of life plans.

Have PM'd you if you require any further info.

[Jockman]

Your parents may be interested in a Funeral Plan.

[Tiggsy]

just get your dad to take out cover and pay his premiums - job done