Seniors Life Insurance and the Over-50s
Less than 50% of over-50s in Australia have sufficient Life Insurance cover. Are you one of them?
The older you get, the more you may worry about maintaining the same living standard for you and your family that you currently enjoy now. Among other things, having the right Life Insurance should help you and your family remain financially secure if life took a turn for the worse.
But what if you still haven’t taken out a policy?
The good news is that it’s not too late – you can still get adequate cover for your family’s needs. Plus, it may not be as expensive as you might think.
It may not come as a surprise that the older you get, the more prone you’ll become to illness or injury.
Think of it like this: Life Insurance is a safety net that protects your family financially if you were to pass away, became seriously ill or if you couldn’t work and earn an income as a result of a serious illness or injury.
Discover some of the reasons why seniors may wish to consider Life Insurance, including an overview of how to arrive at the best policy for you, in this article.
Why Should You Get Life Insurance in Your 50s?
A 2017 AMP report shows that those in their 50s make the most Life Insurance claims. In fact, the average claimant age was 52.
All the more reason to purchase Life Insurance sooner rather than later if you happen to be in your 50s.
1. Protecting Your Family from Outstanding Debt
A lot of seniors in their 50s have made great progress in reducing, or even clearing their mortgage, but there could be other debts from investments or properties.
Sure, some investments may have equity. But if your family needs to sell off the asset because they can’t cover the debt, the value could dwindle.
To prevent that, you may wish to consider attaining an adequate amount of Life Insurance to cover the debt.
If you do, The debt wouldn’t fall on your family and you’d get to keep the investments for their intended purpose, such as for the children to inherit or to become part of your partner’s retirement plan.
2. Removing Uncertainty
For many people over 50, financial circumstances change. Your children might have finished schooling and started earning their own incomes. But that’s not set in stone.
There’s a possibility that your children’s circumstances may change and come back to live with you. Beyond that, you might also have to provide for your grandchildren.
Your Life Insurance may be able to cover expenses that arise from such events.
3. Fair Split of Your Estate
To avoid any conflict within the family, you’d probably want to ensure your family members get an equal split of your assets.
It’s not uncommon that one’s asset portfolio may be complicated and that there may be a significant asset that’s hard to split without losing value. This is often the case with small businesses and farms.
If you have Life Insurance, it’s possible to diversify the assets and split everything between your children and spouse.
Maybe one of your children would like to continue running the family business if you were no longer around or couldn’t work. At the same time, the other child could be the beneficiary of your Life Insurance policy to achieve an even split.
4. Stepped vs Level Premiums
You may be wondering what the difference is between stepped and level premiums?
Stepped premiums increase annually as you age. For instance, stepped premiums for those in their 20s may jump around 2% per year. But as you grow older, that increase could reach 7% per year.
If you attain Life Insurance with level premiums, it means that your premiums will not increase as you age. The only increase in premiums will be for adjustments to guard against inflation, or changes in the insurer’s underlying premium rates. While it may be reassuring to know that your premiums will not increase with age, Life Insurance with level premiums will initially be more expensive than insurance with stepped premiums.
5. Funding Premiums with Super Fund
If your insurer allows it, you could utilise your self managed superannuation fund (SMSF) to cover the Life Insurance premiums.
This strategy may come with certain tax benefits. And it may be easier on your cashflow. However, there are downsides to consider. For example, you cannot hold Income Protection cover or Trauma cover in your SMSF.
6. Safeguarding Against Unexpected Health Issues
One of the main reasons most claimants are in their 50s is deteriorating health. What’s more unfortunate is that there are plenty of examples of people cancelling their Life Insurance as they get older, often before an unexpected claimable event occurs.
But why would you consider cancelling your Life Insurance in the first place?
After all, your financial obligations might not be the same. If your children have finished school and are off on their own, for example, you may have fewer expenses since you no longer need to provide for them. This doesn’t mean you’re completely off the hook, though.
Your health can change at the drop of a hat. Without Life Insurance, you and your family may be left in a difficult financial position should the worst happen
How Much Will Seniors Life Insurance Cost?
Noble Oak recently conducted a survey and found something worrying.
Only 53% of Australians aged 55-60 took out life insurance. In contrast, the number is much higher (73%) for those between 30-34 years old.
The reasons why fewer older Australians purchase Life Insurance may vary. But the cost is almost always near the top.
But the good news is, the premiums for those in their 50s might not be as high as you suspect.
Sure, age is one of the main factors that influence the premium. It’s simply because you’re at a higher risk of becoming a claimant when you’re older.
However, your premium will still be much lower than if you wait until you’re in your 60s. Also, premiums will vary from one person to another based on the following:
- your current health
- your smoking status
- the level of cover you attain
- your lifestyle pursuits
- your occupation
In addition, insurers may require you to undergo a medical exam to determine your health status. Still, your premium won’t be that expensive as long as you’re in good health and don’t lead a lifestyle or engage in an occupation that carries higher risks.
How Can I Get the Best Policy?
With age, it’s natural to think more about how to help your dependants maintain their lifestyle should the unexpected occur. It’s true that you’re at a higher risk of illness or injury, which will drive up the premium. But this doesn’t mean you can’t get adequate cover without burning a hole in your pocket.
Find out how you can qualify for the right type of policy that covers your needs at budget that suits you.
1. Check Your Health
Most insurance providers will ask you to go through medical testing before you take out a policy. If you have any medical conditions or a lifestyle that is classified as risky, these will affect your premium.
Also, it’s important not to hide any medical conditions you may have. Doing so gives the insurer a valid reason to refuse payment in the event of a claim.
2. Make Sure to Understand the Benefits and Features
When you take out an insurance policy in your 50s, there will be certain terms, conditions and exclusions attached to the benefits and features of the cover that you should take the time to understand.
Most policy documents are written with jargon free language, so they are easier to understand than you may think.
Look out for any ‘pre existing condition’ clauses or if there is anything that seems out of place. Don’t hesitate to ask the insurance representative to clarify things for you.
More importantly, you don’t need to jump at the first opportunity that comes your way. It’s okay to shop around until you find the right product.
3. Are There Any Discounts?
Being in your 50s doesn’t mean you won’t be able to get a discount.
There could be a discount on the premiums for paying annually, or for holding two or more cover types. These vary from one insurance provider to another, so don’t hesitate to ask about the specifics.
4. Jumping online or seeking professional help
There are a lot of options available if you wish to go direct to the life insurer, whether online or giving them a call. There are also a number of compassion sites. You’ll be able to get information about the product (including a product disclosure statement), and with many life insurers, get a quote and even apply for cover online or via the telephone.
You can also get advice from an adviser or wealth planner to assist in finding your ideal insurance plan. This professional will assess your needs and budget to determine the most suitable Seniors Life Insurance policy.
Seniors Get Insured
In this day and age, there’s no slowing down after your turn 50. Chances are, you still have dependants to think about and provide for.
More importantly, it may be hard to admit, but your health may not be the same as it was back in your 30s. That’s why it’s important to do everything in your power to ensure the financial security of your family if life took a turn for the worse.