Are you over 50 and underinsured?
When I last visited my dentist, he casually asked what I did for a living. I told him that I worked at NobleOak and, naturally, I had to ask whether he had Life Insurance. He just laughed and replied that he was in his fifties, so “too old to have Life Insurance”.
He is not alone in assuming that Life Insurance is a young person’s game. In research conducted by Pureprofile in 2018, we found that only 53% of older Australians, aged 55 – 60, are likely to have Life cover compared to 30-34 year-olds (72%) and 35-44 year-olds (68%). However, that doesn’t mean that people stop needing Life Insurance at age 50.
If you’re over fifty, and either don’t have Life Insurance or you are considering cancelling your policy, now might be a good time to assess whether you’re underinsured. If you are considering cancelling an existing policy, it’s important to assess whether you can afford to retire it.
What is the value of taking out Life Insurance?
Life cover pays your beneficiaries a lump sum in case you die or become terminally ill, helping to clear your debts (such as a mortgage) and support your family in your absence. It’s something that many people decide to purchase at some of life’s biggest moments – getting married, buying a house, or having children. Like the kids say, it’s something you think about when you’re properly ‘adulting’.
With the average age of first time motherhood steadily rising, your nest is probably still full of baby birds well into your fifties. When you have dependents that rely so heavily on you for their financial security and wellbeing, Life Insurance gives you the peace of mind that you can help continue to provide for your loved ones should you pass away suddenly or be diagnosed with a terminal illness.
I am not raising a family anymore, so why do I need Life Insurance?
This is a valid question to ask. As you get older, the cost of supporting your dependents might not be as much of a consideration as they (hopefully!) become more financially independent. However, if you have been diligently saving up a nest egg over the past twenty or so years, wouldn’t you prefer for this to go to your beneficiaries rather than using it towards paying off any debts you may still have?
I have a mortgage, but I should be able to pay it off by the time I retire. Why do I need Life Insurance?
A 2015 survey of income and housing by the Australian Bureau of Statistics shows an increase in the number of homeowners who owe money on mortgages across every home-owning age group between 1990 and 2015. The sharpest increase is among homeowners approaching retirement. The survey showed that 47% of home owners aged 55 to 64 years still owed money on their mortgages.
If something were to happen to you before you paid off the mortgage, and you don’t have enough money set aside to pay this off, the lender might be able to foreclose on the property and sell it in order to recoup its money. Rather than being part of the foundation of your children’s financial future, for example, the house could represent debt and financial stress.
Won’t my Life Insurance expire at age 65 anyway?
At NobleOak, the maximum age of entry for term life insurance under our Premium Life Direct product is 69. Once accepted, and providing that you continue to pay your premiums, you are guaranteed to have your cover renewed every year until age 99.
I already hold Life cover through my superannuation, so why would I need another policy?
In many cases, Life Insurance cover held through your superannuation fund expires once you reach the age of 65 or 70. With life expectancy for Australian men and women being 80.5 and 84.6 respectively, this could potentially leave you underinsured for the last fifteen to twenty years or so of your life.
Are there any drawbacks to taking out Life Insurance later in life?
As with most things in life, there are always pros and cons to consider. Insurance premiums do tend to increase sharply from around age 50, due to the increased risk of insuring you.
As the number of candles on our birthday cake go up each year, so too does the number of health conditions that we are statistically more likely to develop, such as certain cancers. This doesn’t just apply to age. Any increased risk for the insurer – such as a pre-existing condition or a dangerous hobby – results in more expensive premiums (a loading) or even an exclusion.
Is the application process any different for me if I am older than 50?
If you’re over the age of 50 (or requesting a high level of cover at any age), it’s very likely that you will be asked to take a medical exam as part of your application. However, it’s nothing to stress about – it’s quite simple and straightforward. You don’t need to worry that we’ll stick wires all over you and make you run on a treadmill for thirty minutes!
If we need you to provide a urine or blood sample, or to take your measurements for BMI, a nurse from our healthcare provider will come to your work or home. The cost of this test will of course be covered by us.
When would Life Insurance be unnecessary?
If you have already paid off the mortgage, you have never had kids or the kids have already flown the nest, and you and your partner have a sizeable nest egg, then you might consider that you have no need to take out a Life Insurance policy in your fifties. You don’t want to pay for something you don’t need, especially when premiums in your fifties do cost more than in your younger years.
Just to be on the safe side, our award-winning Life Insurance calculator can help you determine whether you are underinsured.
To insure or not to insure …
…that is a question that only you can answer, perhaps with the help of some professional advice. This is general information only and does not take into consideration your individual circumstances, objectives, financial situation or needs.
Sources
(2) https://www.aihw.gov.au/reports/life-expectancy-death/deaths-in-australia/contents/life-expectancy