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Last Updated on 11 December 2019

Life Insurance for Over 50s

Life Insurance Over 50s

Australians recognise the value of life insurance, but a surprising number don’t have coverage. Life insurance provider TAL found that while 79% of survey respondents rated life insurance as important or very important, only 52% held some form of coverage.

If you’ve already turned 50, you might think it’s too late to purchase a policy. That’s not the case, and there are several reasons you may want to consider life insurance now more than ever.

Key Points
  • You might not think you need life insurance once you turn 50, but situations can always change.
  • There are a variety of options you can choose when purchasing life insurance past 50. Your premiums may start to rise after a certain age, so make sure you compare policies.
  • To avoid high premiums, purchase life insurance at an early age.


Why Should You Consider Life Insurance?

If your children have already left the house and started their own lives, you might not see a reason to purchase or maintain a life insurance policy after a certain age.

Your spouse might receive enough money to sustain his or herself in the event of your death. The two of you may even have enough money saved to cover the unexpected.

If there aren’t too many people who rely on your income, a life insurance policy might seem like a waste of money. Some people think that life insurance is only for young families who can’t afford a death or long-term disablement.

There are a number of reasons a person should consider life insurance after they turn 50. Below we’ve listed a few for you to consider.

Situations Change

Part of the purpose of a life insurance policy is to plan for the unexpected. When your family is young, this means providing financial protection for life’s worst possible scenarios.

As your children get older and become financially independent, you might not see a reason to keep your policy. Keep in mind, though, that everything is subject to change.

Children could always come back home if they get divorced or encounter financial hardship. They might require your financial care once again, and it’s essential that you have your bases covered if this happens.

More people in their 20s living with their parents - graph

Equalising Inheritance

Inheritance can be a volatile topic, and it’s known to split siblings apart. If you own a plot of land or small business, it only further complicates the issue.

Splitting your assets equally among your children might be the easiest way to avoid a headache, but it’s not the best option for everyone. One child might have more of a stake in the land or business you own.

If you split these assets, the child who will take over the land or business will have to buy the others out. Instead, you can have one or two children be the beneficiaries of your life insurance policy, while the other gets the business or land.

Covering Debts

If you don’t have any debt right now, that doesn’t mean you won’t take any loans in the future. You might find a new property or investment that interests you, causing you to take out a loan and incur debt.

If you happen to perish before you pay off your debt, your family might be forced to sell assets to cover your payment.

A life insurance policy that covers your debts is one way to make sure your kids never have to pay for your purchases.

What Are Your Life Insurance Options?

If you’re over 50, the clock is ticking on your life insurance window. Fortunately, you’re still young enough to qualify for all life insurance benefits from most providers.. You can still receive benefits like income protection and TPD insurance for another 15 or 20 years after turning 50.

Premiums will be higher if you sign up for a plan after you turn 50, but you can still choose a level premium model if you prefer.

Your premiums will be locked in after you purchase your plan. Although, Insurers will shift you to a stepped premium model once you turn 65 or 70.

Minimum and maximum entry ages for life insurance

Income Protection

Income protection may be more important for younger households, but many people in their 50’s and 60’s can still benefit from it.

Income protection ensures your family can still cover their regular expenses if you’re forced out of work by an injury or illness. Having this policy will provide your family with up to 75% of your monthly income for a set period.

Trauma Insurance

Trauma insurance, or critical illness insurance, will pay your family a lump sum if you’re diagnosed with a critical illness, as the name suggests.

The policy will pay your family if you suffer a stroke, heart attack, are diagnosed with cancer, and a few other specified unpreventable illnesses.

To sign up for one of these policies, you usually have to be under the age of 65 if you have level premiums. The insurer might allow for older signups with stepped premiums. The policy will almost always expire by the time you turn 70.

It’s also essential that you compare coverage options with these plans. Some insurers will cover a wider range of illnesses than others.

TPD Insurance

TPD insurance relates to your ability to work. You may receive a trauma insurance payout regardless of whether you can work. On the other hand, TPD insurance only covers you if you’re forced out of work.

This policy won’t be necessary if you’re already retired. Over the past five years, however, the retirement age has risen to 59 for women and 61-64 for men.

This coverage protects your family if you suffer an injury or illness that affects your ability to work. These conditions often aren’t life-threatening, like loss of sight or hearing.

Death Cover

Death cover is what most people think of when they hear “life insurance”. This coverage option provides a lump-sum payment to your family if you die or are diagnosed with a terminal illness.

There are a variety of coverage options here, but you usually have to be under 75 to qualify (maximum age varies depending on the insurer).

If you’ve been paying level premiums for a while, these will stay in place until you hit your insurer’s cutoff age. This will usually be around 65 or 70, and your policy will then switch to stepped premiums.

Death cover premiums increase as you get older, and some families have a hard time justifying the high payments. Instead of cancelling your insurance, check with your provider to see if you have additional options.

Some providers give you the option to freeze your premiums. If you elect to do this, your premiums will stay the same, but your level of cover will be reduced each year. If you think you might struggle to afford higher premiums as you age, this option can make your cover more affordable over time.

Funeral Insurance

You can sign up for funeral insurance through most providers until you turn 80. It will stay with you for the rest of your life as long as you keep the coverage active.

Funeral insurance is the most straightforward of all senior life insurance policies. It provides $3,000 to $15,000 (depending on your plan) upon your death to cover funeral expenses.

If you’re confident that you don’t need to purchase any other forms of life insurance, funeral insurance is still a popular option. You’ll lighten the financial burden on your family by paying for your funeral.

Buying Life Insurance Early

If you’re over 50 and haven’t bought life insurance, it isn’t too late. You can still provide security for your family if anything were to happen down the track.

You might think you’re in a decent position now, but circumstances are always changing. Your family could face financial hardship in the future, which will only compound if something were to happen to you.

Buying a policy early could save you money in the long run, as you can lock in a lower rate through level premiums. You may also get the most out of your policy by buying sooner rather than later.

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