Ugh,
@Jen and Ashwin I'm sorry. That is so frustrating. You are right though, only they can make the decision to change. Hopefully it's not too late for them to turn things around. At least you could help them with the life insurance and get them pointed in the right direction.
I was also frustrated with my MIL in this past weekend during Christmas, though slightly different circumstances. FIL has not worked since his heart attack in June, and it's looking increasingly unlikely that he will ever be able to return to work based on his current mental status. Or at least not in the foreseeable future. He was self-employed and the breadwinner, so they are now down to MIL's salary. While it's certainly not poverty levels, it's the median U.S. income to support both of them and BIL who is 20 and living at home to take care of FIL during the day (so a full-time job in itself).
MIL insisted that she was going to buy us something for Christmas, so I finally agreed that she could get us an on-sale, very reasonably priced grill for our house. I gave specific instructions that she could only buy that and no surprise "Santa" gifts for the dog, as she usually does. So what does she show up to our house with? The grill. And a shirt for me, a new set of pots and pans for us, and $200 cash in an envelope!
I don't mean to sound ungrateful, but I was literally so mad. She told me back when FIL had his heart attack that they had enough money to get them through the end of the year if he couldn't work anymore. Well, guess what? IT'S THE END OF THE YEAR. She kept trying to tell me how we needed the money to pay bills. No. We make THREE TIMES what you're currently making. YOU need the money. Not to mention the pots and pans. We have told all of my friends and family so many times not to buy us any household goods because we live in a very small one room log cabin and we literally do not have kitchen cabinets (not joking).
I really don't intend to be ungrateful or mean because I know she was doing this out of the kindness of her heart, but I was beyond irritated. I love my in-laws like they're my own parents, and I would have absolutely no problem whatsoever contributing to their household expenses if she told me they needed help. But don't just give your money away after you promised me you wouldn't do that! FIL spent 8 weeks in the hospital and is still receiving a lot of therapy and counseling, so I know the bills are only adding up. I would've been much happier if they had just shown up at our house for Christmas with nothing for us. It is a gift enough that my FIL is still alive to see Christmas.
ETA: Jen, I am glad you got the loan fiasco settled though! I know that was really frustrating for you both last year.