As parents get older, circumstances can sometimes be reversed, and the children assume the care of their parent(s). Loss of a spouse, health concerns and/or advanced age are factors that can affect your parent(s) independence. This role reversal can be a difficult transition for both the parent and the child. However, with open communication and patience, this transition period can be made less difficult.
An issue that can be difficult to discuss with your parent(s) is their financial status. However, in case of sudden death or illness, you need to be aware of insurance policies, bank accounts, etc. If you need to talk to your parent(s) about their finances, here are 5 questions you should ask them in order to obtain the information you need.
Ask for a complete and thorough list of all their assets.
Besides the obvious assets, such as a home, cottage and/or vehicles, you need to know exactly what their assets are. This includes bank accounts, real estate investments, pensions, RRSPs, etc. Get copies of all their financial documents, and keep them together in a file folder. In case of illness or death, you will need to have access to these documents.
What are your parent’s total liabilities?
You need to be aware of any current debts that they owe. This is also a good time to discuss different finance options, such as debt consolidation. If they have co-signed for another person’s debt, make sure you obtain this information as well.
Are your parents going to need financial support in the future?
Realistically look at their income from pensions and/or savings. Will this be enough to support them, and for how long? How much income is generated from their investments? If your parent(s) have not managed to adequately save enough, this is the time to talk to your sibling(s) or other family members about financial support.
Do your parents have insurance coverage?
Ask to see all current insurance policies your parents have. Health insurance is critical at this stage in life, as well as life insurance. This includes any policies that they may have from employee benefits, as well as any that they have purchased. Check to see what kind of coverage they have, and any terms and conditions of the policies. If they have term life coverage, check to see when this expires. If they do not have adequate coverage, this is the time to consult with your insurance broker and obtain the policy that is right for them. You also need to be aware of who is named as the beneficiary and update this if necessary.
Get copies of all insurance policies so you have access to the information if needed.
Discuss the Power of Attorney
Although this can be a very sensitive topic, you need to discuss what will happen in case of sudden and/or prolonged illness. Talk to your parents about who they would like to take on this responsibility, as well as their wishes. Talk to them as well about their wishes in regard to a living will.
It is important to discuss these financial issues as soon as possible. By having a complete picture of your parents’ financial status, you can make plans accordingly. If you discover that your parents don’t have sufficient life insurance coverage, you may want to consider a Guaranteed Issue policy.
There is no medical questionnaire and acceptance is guaranteed. This is beneficial for those who have current health issues.
There is also Guaranteed Issue Health Insurance, for those who do not have coverage. This also does not require a medical exam. Health insurance is imperative for the elderly, as their risk for developing health problems increases.
Talk to your parents and your insurance broker to ensure that they have adequate coverage.