Why would parents, of a young adult without dependents, not profit from the young adult's Term Life Insurance?
It is not likely the YA would die in 10 years. Hence the investment the parents make in policy premiums would lose all of its money. Repeat: lose all money.  On average, you'll slightly lose with insurance. It's there for peace of mind and to mitigate a catastrophe. It's not an investment. Of course, if the YA is likely to die suddenly, that might change things. But concealing medical information would be grounds for denying the policy claim.
Term life insurance makes sense if you will have a need for money if someone dies.  If you (and your brothers) do not have enough money currently for a proper burial for your father, then you might consider term insurance to cover this.  If you already have the money to cover this (or can save for it in a short amount of time), then you are better off financially to not purchase the insurance. Estimate what you think it will cost for a burial, then determine if you have this money available to you.  If you already do, then don't purchase the insurance. If you do not have this money available to you, then you can look into a term life insurance policy on your father.  You definitely do not want a whole life insurance policy.  This will cost many more times what a term policy costs.  A term policy is a policy with an expiration date. For example, let's say that you determine that you will need $10,000 when your father dies for the funeral and burial.  You could get a 10-year policy on your father for $10,000.  Over the next 10 years, besides paying your premiums, save up $10,000 ($1,000 each year) in some type of savings/investing account.  Hopefully, your father will still be around 10 years from now, and you won't need the insurance policy anymore, because you will have saved enough to cover the costs when the time comes.  Doing this will almost always cost you less than getting a whole life policy, which never expires, but has much higher premiums. There are also 20-year term policies, which will cost more, but will give you more time to save up your fund.  The costs for these policies depend on your father's age, so get a quote for both and decide what will work for you. You can get no load annuities through some no-load financial companies like Vanguard so to start with I'd see how what she is being offered compares with something that comes free of a sales load. I'd also question that fixed rate, seems pretty impossible to me, which makes me think there is some catch or 'gotcha' that we are not seeing that either brings down that rate, or makes it delusional (they are kidding themselves) or deceptive in some way.  In any case it's setting off my 'too good to be true' alarm at full volume, along with the 'shark attack' alarm as well. (I would strongly suspect the 'advisor' is advising the product that makes the most money for him, NOT what is in your mother's best interest)  A fixed annuity is an insurance product, not a security, because the insurance company must credit the annuity holder’s account with the specified interest rate for the contractually-stipulated time period, regardless of market fluctuations in actual interest rates. It is the insurance company that bears the investment risk, which it does by investing the annuity holder’s purchase proceeds in fixed-income instruments that the company hopes will provide sufficient return to fulfill its contractual representations to the holder.  THIS is why there is no prospectus (it's not a 'security' they are not required to provide one by SEC) because the risk is entirely with the company. Obviously as pointed out in the comments, the company could easily go out of business (especially of they sell a lot of these and can't find a way to get that kind of return on the invested money).  Now, ask yourself, if I was the insurance company, would I be comfortable guaranteeing that level of return over that much time if I intend to make a profit from it, pay sales comissions, and stay in business?   In terms of 'will they stay in business' I'd have a hard look at their ratings, and go compare where that is on the total range for AM Best (they are lowest 'secure' rating, next thing down is in the 'vulnerable' category) and Standard and Poors (4 places down from their best rating, next thing down is 'marginal' followed by 'poor')   You might also want to see if you can get any idea of historical ratings, is this company's ratings falling, or rising?   Personally, for the amount of money involved, I'd want a company with MUCH higher ratings than these guys..  THEN maybe someone could say 'no risk', but with those ratings?  an no, I don't think so! BTW I'd check over what this bozo (um sorry, that's not fair to clowns) is recommending she do with her own funds as well.  For example is he recommending she take something that is already tax sheltered such as an IRA and investing the stuff inside that in an annuity (kind of pointless to 'double shelter' the money, or lock it up for a period of time when she may be required to make withdrawals) make sure you don't see something there that is actually against what is in her best interest and is only done to make him a comission. This is snarky, but I really consider life insurance only to be an investment for THE INSURANCE COMPANY, if you don't have dependents who will need the insurance in case you are hurt or die. I'm not the guy you're responding to, but you asked a good question. There's a dearth of data, but [about 1% is the estimate.] (http://www.businessinsurance.com/article/20110814/NEWS03/308149986#)  Either way, having increased young adults on an insurance plan is a good thing. Socially, this demographic is exceptionally stinging from the Great Recession and I think the ability to give young adults health insurance (and thus the freedom to start developing a career without worrying about health coverage) outweighs the nominal additional premium costs. Fiscally, having young adults in a group plan decreases the risk profile of that plan since young adults don't incur the same expenses that a 45 or 50 year old would. Putting your money in the same account as a parent could cause many problems, with very few benefits. One of you would have to claim the dividends and capital gains that the fund might earn during the year. That person might have to pay taxes on those earnings. You would have to find some way of figuring out how to split the costs, and somebody would have to reimburse the other. If one person wanted to sell, figuring out which shares to sell would be much more complex. If these are retirement accounts, which have maximum limits based on income, and the use of other retirement accounts, there is no way to co-mingle the funds. Even if it was possible to combine the funds, the reality is that two people decades apart have different investment goals, and risk tolerances, so the types of investments that a great for one, are very poor for the other. The only benefit is that an existing account would already have more than the minimum investment, so some investments would be easier to make. Also some investments have lower fees if you meet specific investment thresholds. If the fund increases in value by 10% in a year, it doesn't make a difference if the value at the start of the year was 10K or 100K. The rate is the same. The benefits are minor and few; the drawbacks are many; and some situations make it impossible to co-mingle the funds. Life insurance is not an investment -- by definition, since the companies need to take a profit out of it, the average amount paid in exceeds the amount paid out, yielding a negative rate of return. Get life insurance if your death would cause severe financial hardship for someone. If you have sufficient savings that your wife could recover and move on with her life without hardship, and your kids are grown, you probably DO NOT need life insurance. Your parents would file their taxes as they normally do. It would be as if your parents were landlords renting a room to your girlfriend. She would not be claimed on their taxes. If your girlfriend pays rent to your parents (through her parents or otherwise) it would be claimed as rental income. The household size wouldn't change because even though your girlfriend is living with your parents they are not financially responsible for her. Example: A landlord would not claim renters as dependents or in household size on their taxes. "If they allowed people to skip reporting the funds ""even though I might not intend to use this money to help my kids through college"", then children of a Billionaire would be eligible for financial aid.   In addition you might have reported all your income to the IRS, but the rest of the government isn't able to see that information." There is no benefit in life insurance as such (ie, death insurance.) There is a great deal of value in other types though: total and permanent disability insurance, trauma insurance (a lump sum for a major medical event), and income protection insurance (cover against a temporary but disabling medical condition).  If you don't have that, you should get it right now. This is about the most important insurance you can carry.  Being unable to work for the rest of your life has a far larger impact than having, say, your car stolen. ...  If, later on, you acquire dependents, and you feel you ought to have life insurance, then you will have a relationship with a life insurance company, and maybe they will let you upgrade from income/TPD to income/TPD/life without too much fuss or requalification.  Some do; whether yours would I don't know.  But at least you have a toe in the door with them, in a way that is infinitely more immediately useful than getting life insurance that you don't actually need. No It's not a loan. It's an equity investment. Think of it as a business. The parents bought 75% of the equity with $115K, and are entitled to 75% of the sale proceeds, should you someday liquidate the business (i.e. selling the house). The $500 per month is just business revenue and is paid to your parents as a dividend. Imagine you rent it out to your self and charge a $666.66 rent - you take 25% of that back and give your parents the rest. Like any equity investment, the risk for them is that if the value of the house goes down, they will have to shoulder the loss.  And you are right, there is no way to build equity. You already sold that to your parents. "Is your mother still paying the premiums, or are you? If you're paying the premiums, then just contact the company and say you are no longer willing to pay and want to cancel the policy. If she's paying the premiums, why do you care? If the issue is the non-smoking declaration, and you are a smoker or want to take up smoking ... I don't know what country you live in, but I'd be surprised if there's a law anywhere that gives your mother the legal authority to forbid you from smoking when you are over 18. If you are paying the premiums, then contact the insurance company and tell them that you are no longer a non-smoker. The premiums may go up. If she is paying the premiums, tell her that you are now a smoker and that she should contact the insurance company about changing this clause in the policy if she wants to be sure it remains valid. If she declines to do this, that's between her and the insurance company. As you're not a party to the contract, it really has nothing to do with you. If, as you say, your mother is not fully capable of managing her affairs, you could contact the insurance company for her. I don't see how you could get the policy ""invalidated"". Unless there is some evidence that the life insurance company made false claims, or somehow tricked your mother into buying the policy, or that the policy violates local law, there is nothing ""invalid"" about it. Just because you've decided you don't want the policy doesn't make it invalid. Likewise I don't see how you could get the premiums refunded. The whole point of life insurance is that you pay a monthly premium, and if and when you die, they pay the beneficiary the face value of the policy. Life insurance is often described as a kind of gambling game: The insurance company is betting that you will live long enough to pay more in premiums than they pay out in benefits. You are betting that you will get more in benefits than you pay in premiums. If you die young, you win! If you could wait and see if you die within some time period, and if not demand your premiums back, well, that would be like saying that you want to bet on a spin of the roulette wheel, and if you win you take your winnings, and if you lose you want to get your original bet back. What casino would agree to that? You should be able to cancel the policy at any time. I suppose there might be some specific commitment in the contract, like you pledge not to cancel within X years. If you never signed it, I don't see how you could be obligated to pay for it, regardless of what commitments your mother made. I don't know where you live or your country's laws, but I doubt your mother can sign a contract legally committing you to pay for something for the rest of your life. You say it's a ""whole life"" policy, which means it should have some cash value if you cancel it, i.e. you get SOME money back. Not everything you and/or your mother paid in, but something." "I was in the health insurance game for 10 years and never heard of this until the Affordable Care Act came about.  To my knowledge, there is no rule or regulation prohibiting it, however trying to get an insurer underwrite that risk is extremely unlikely. It's the same reason why you don't see AAA offering health insurance. There isn't a contractual relationship between the church and their constituents, so no underwriter worth their salt would put a reasonable price on that risk.   Members can easily come and go, and since insurance through your employer is still the dominant distribution channel for health insurance, it would be seen as an adverse risk, meaning that people who couldn't get it through ""normal"" channels must be getting it through the church, which it would then be assumed that this person applying for coverage is an ""adverse risk"" or someone who is abnormally unhealthy.  There are faith-based healthcare reimbursement programs that are NOT health insurance and do not satisfy the ACA required minimum coverages. From what I've seen and read, it's basically members of the religion or faith that pay money into the system (like paying an insurance premium) and they elect a board that basically evaluates each claim and pays or doesn't pay it, either partially or in full. While this is a nice way to get your bills paid, odds are it won't cover your $300,000 cancer treatment or your $50,000 cesarean section birth." Annuities, like life insurance, are sold rather than bought.  Once upon a time, IRAs inherited from a non-spouse  required the beneficiary to  (a) take all the money out within 5 years, or  (b) choose to receive the value of the IRA at the time of  the IRA owner's death in equal installments over the expected  lifetime of the beneficiary.  If the latter option was chosen, the IRA custodian issued the  fixed-term annuity in return for the IRA assets. If the IRA  was invested in (say) 15000 shares of IBM stock, that stock  would then belong to the IRA custodian who was obligated to  pay $x per year to the beneficiary for the next 23 years (say). There was no investment any more that could be transferred  to another broker, or be sold and the proceeds invested in Facebook stock (say).  Nor was the custodian under any  obligation to do anything except pay $x per year to the  beneficiary for the 23 years. Financial planners loved to get at this money under the old IRA rules by suggesting that if all the IRA money were taken out and invested in stocks or mutual funds through  their company, the company would pay a guaranteed $y  per year, would pay more than $y in each year that the  investments did well, would continue payment until the  beneficiary died (or till the death of the beneficiary  or beneficiary's spouse - whoever died later), and would return the entire sum invested (less payouts already made, of course) in case of premature death. $y typically would be a little larger than $x too, because it factored in some earnings of the investment over the years. So what was not to like? Of course, the commissions earned by the planner and the lousy mutual funds and the huge surrender charges were  always glossed over. Whole life insurance accumulates a cash value on a pre-tax basis. With a paid-up policy, you make payments until a particular age (usually 65 or 70), at which point you are insured for the rest of your life or a very old age like 120. You can also access this pool of money via loans while you are still alive, but you reduce your benefit until you repay the loans. This may be advantageous if you have a high net worth. Also, if you own a business or farm, a permanent policy may be desirable if the transfer of your property to heirs is likely to generate alot of transactional costs like taxes. Nowadays there are probably better ways to do that too. Whole life/universal life is a waste of money 95%+ of the time. An example, my wife and I were recently offered open-enrollment (no medical exam) insurance policies our employers in New York. We're in our early 30's. I bought a term policy paying about $400k which costs $19/mo. My wife was offered a permanent policy that pays $100k which costs $83/mo, and would have a cash value of $35k at age 65. If you invested the $60/mo difference between those policies and earned 5%/year with 30% taxes on the gains, you'd have over $40k with 4x more coverage. "@Alex B already answered the first question. I want to respond to the second and third: I have heard the term ""The equity on your home is like a bank"". What does that mean? I suppose I could borrow using the equity in my home as collateral? Yes, you can borrow against the equity in your home. What you should keep in mind is that you can only borrow against the amount that you've paid on your house. For example, if you've paid $100,000 against your house, you can then borrow $100,000 (assuming the value hasn't changed). The argument that this is a good deal misses the obvious alternative: If you didn't spend that $100,000 on a house, then you'd still have it and wouldn't need to take out a loan at all. Of course, equity still has value, and you should consider it when doing the cost/benefit analysis, but make sure to compare your equity to savings you could have from renting. Are there any other general benefits that would drive me from paying $800 in rent, to owning a house? Economically: As you'll notice from my parenthetical remarks, this is extremely situational. It might be good to come up with a spreadsheet for your situation, taking all of the costs into account, and see if you end up better or worse. Also, there's nothing wrong with buying a house for non-economic reasons if that's what you want. Just make sure you're aware of the real cost before you do it."