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Taking Care of Mom and Dad: Life Insurance and Annuities Introduction

I was worried that my dad didn't have tons of money when he started getting sick, about two years ago. I was afraid that he was going to spend his last days in some rotten retirement home or a VA hospital. But, when I flew down to Florida to help him sort out his finances, it turned out that he was in much better shape than anyone thought. He had a really good life insurance policy that allowed him to take funds early to pay for nursing home care; and he had an annuity that guaranteed him another $1,000 a month in addition to his Social Security. He was smarter about this stuff than I expected.

An often-repeated life insurance advertisement says: Life insurance isn't for the people who die. It's for the people they leave behind. And then the picture fades to a little kid playing with his young mother. This is a scare tactic that sells a lot of policies.

However, life insurance can be as useful to the person whose name is on the policy as to the beneficiaries. The life insurance industry is very smart about crafting policies that offer benefits to insured people before they die. And these benefits can be a big help to your parents...and you.

The life insurance market is also a crowded place, full of companies and brokers (some ethical, some not) vying for your parents' money. Your parents -- like any consumers -- should proceed carefully. They (and you, if you're helping them) need to ask basic questions about what kind of life insurance coverage they need...and what they can afford.

Also, as we've seen before with medical coverage, they need to be very careful about replacing policies that they already have in place.

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