Is it wise to get the $1 mil death coverage for your parents? So when they pass away, you will become a millionaire instantly.?

My friend's father bought an insurance for himself. After 2 years, he committed suicide. So his kids will get an annuity for many years.

A $1 million term plan has been pitched by some advisors and term plan believers as a way to plan your legacy.

While it may sound enticing, term plans should be kept to its purpose, to cover for a specific term. There are many things in life that are hard to predict, why complicate it further with things that were made for a different purpose?

Things that could go wrong with such planning:
1. Your parents outlive you and cannot afford the premiums; policy lapses and you lose the money you "invested"
2. You are not able to keep up with premium payments as you also enter retirement while your parents continue to live even older; policy lapses and you lose the money you "invested"
3. Your parents live beyond the expiry of the term (one of the insurer actually has a policy that pays out the sum assured at 101 but the premiums costs more than a UL); you lose the money you "invested"

Remember that actuaries would have factored in the rate of policies being lapsed in their calculation of term policies. Do you want to be a part of their projected lapse cases?

Insurance is a risk management tool for us to protect our dependents. If our parents bought a $1 million policy on themselves with us in mind, it's their gift and legacy to us.

If you buy the same policy on their lives hoping to profit from their departures, you are nothing more than a loser waiting for an inheritance which you have done nothing to work hard for.​​​

To get $1 mil the annual payment is pretty high isn't it? What happens if they don't conk out until 101? Jialat la...