Over 60? Secure affordable life insurance with fast approval.
While it's common for Australians in their 60's to either be retired or approaching retirement, there still may be value in investing in a life insurance policy. Some typical costs you may wish to cover at this age include:
- Outstanding debt including mortgage and smaller personal loans
- Estate planning
- Medical expenses in the event you suffer serious illness or injury
- Funeral costs
Continue reading for an in depth understanding of how life insurance works for applicants over 60 years of age.
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How can this page help?
How cover works when you are over 60
- Why should I consider life insurance after my 60th birthday?
- Features to look for at this age
- What types of cover is available?
The cost of cover
Why should I consider life insurance after my 60th birthday?
Life insurance, at this point, can benefit not only you, but your family most especially. Just think what great a burden can be taken from their shoulders when you have all the payment for the final expenses taken care of. By this, you will be able to help them adjust smoothly. Moreover, when you have life insurance at 60, you can also use this to leave something behind not only for your kids, but for your grandchildren as well.
Your mortgage is paid off and your kids have grown up and left home, so the financial security life insurance offers may not seem as crucial as it did once upon a time. But there are still plenty of reasons why you should consider buying life insurance:
- Provide for your loved ones. Having cover after 60 allows you to provide financial support for your loved ones if illness or injury strike, or if you pass away unexpectedly. This means you can help cover medical and rehabilitation costs, help your spouse maintain their current standard of living, or even have something to leave behind for your kids and grandkids.
- Cover immediate expenses. Your death could place a significant financial burden on your family, so taking out life insurance cover can help them cope with the cost of your funeral and other immediate expenses.
- You’re still young. According to the World Bank, the average life expectancy in Australia is 82.1 years. Of course, many people end up living a lot longer than that, so if you’ve just turned 65 or 70 then you shouldn’t think it’s too late to take out cover. You could still have 20 years or more left to live, so it’s important to make sure you’re protected in the years to come.
- Peace of mind. With lump sum payments of up to $1.5 million available, life insurance gives you the security and peace of mind of knowing that you and your spouse will be protected should the worst happen.
Before you start shopping for cover, however, make sure you’re aware that life insurance does have its drawbacks. For example, all pre-existing conditions may be excluded from cover, and policy expiry ages may mean that some types of cover are not available to you.
But the most significant drawback of life insurance is the cost once you reach 60.. The simple fact is that the older you are, the more life insurance costs, and taking out cover as a pensioner is never going to be described as cheap.
However, the benefits of life insurance mean that it is still well worth considering, so speak to a trusted insurance adviser who can help you find the best value for money.
Is it still worth it when I'm no longer working?
Just because you’re over 65 and no longer working full time, that doesn’t mean you can’t benefit from life insurance. In fact, although you might not have the same financial obligations as you used to, having life insurance cover in place as you transition into your senior years is extremely important.
Features to look for at this age
How can you choose a good life insurance policy that provides the protection you need at a reasonable price? There are a few key features you should look out for:
- Benefit indexation. Most insurers will increase your level of cover each year so that your sum insured rises in line with the cost of living. Your premiums will increase at each policy anniversary to reflect this.
- Premium freeze. If you don’t want your premiums to increase each year due to indexation, check to see whether the insurer allows you to freeze your premiums. This allows you to keep the same premium amount but means that your cover will decrease each year.
- Funeral advance benefit. If you purchase life cover, will the insurer offer an advance benefit payment of a portion of your sum insured to help your loved ones pay for your funeral?
- Financial planning benefit. It can be daunting to work out how best to manage the proceeds from a life insurance payout, so look for a policy that provides cover for the cost of expert advice from a financial planner.
- Guaranteed renewability. Look for a policy that is guaranteed renewable – this means that if your circumstances change and you need to increase your level of cover, you will be able to do so without undergoing further medical underwriting.
- Simple claims process. Making a life insurance claim can be daunting and confusing, especially when you’re going through a period of emotional upheaval. Finding an insurer with a fast and hassle-free claims process can make a big difference.
What types of cover is available?
- Life cover. Life cover pays a lump sum benefit when you die or are diagnosed with a terminal illness. This benefit can be used to help your loved ones pay off debts, manage ongoing expenses, pay for your funeral and maintain their standard of living. Many policies also allow you to add optional cover for accidental death.
- Trauma cover. Trauma insurance offers a lump sum benefit if you suffer a serious medical condition, such as cancer, heart attack or stroke. Sometimes referred to as critical illness insurance, this type of cover can be especially useful as you get older and are more likely to suffer a serious medical event. Trauma cover can be taken out on its own or bundled together with life cover.
- Total and permanent disability (TPD) cover. TPD insurance pays a lump sum if you become totally and permanently disabled. This benefit can be used to cover medical and rehabilitation expenses, pay for home modifications, and generally help with your everyday living expenses. It can be purchased as standalone cover or bundled with life cover.
- Funeral insurance. Funeral insurance provides a lump sum benefit to help your loved ones cope with their immediate expenses following your death. This can help reduce the financial burden of your death and provide important support at a very difficult time.
Age eligibility requirements for different types of cover
One of the common reasons people over 60 avoid taking out life insurance is because they think they’re too old to be covered. However, you might be surprised to learn that you may be eligible for life insurance cover well into your senior years.
Although maximum entry and expiry ages vary between insurers, the following age limits generally apply to life insurance:
- Life cover. Maximum entry age of 75 years and an expiry age of 100.
- Trauma cover. Maximum entry age of 65 years and an expiry age of 70.
- TPD cover. Maximum entry age of 75 years and an expiry age of 100.
- Funeral insurance. Maximum entry age of 80 years.
Life insurance maximum entry ages
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Factors that affect how much life insurance for people over 60 will cost
There are many different aspects to life policies that can make them seemingly expensive if you don’t shop around and compare the best rates. To understand why this might be the case, there are a number of things related to the status of your life and health largely determine the premiums that you need to know, such as:
- Pre-existing medical conditions
- Smoking status
- Premium style policies, which are differentiated into stepped and level policies
How can I save on the cost of my cover?
- Improve your health and lifestyle. Two factors that will affect your premiums, no matter how old you are, and they are your health and your lifestyle. If you are smoker and have some health condition, it could also incur higher charges. However, this should not stop you from getting life insurance. There are still a lot policies which have competitive life insurance premiums for those who smoke and have health conditions.
- Take advantage of your gender. Gender also plays an important role in how much you will pay for cover. A 60-year old woman will pay one-third less in premiums than a 60-year old man. So if a 60-year old, healthy, non-smoking man and woman get a 10-year term life insurance policy worth $100,000, the man will have to pay $676 every year in premiums while the woman will only have to pay $449 every year (based on a rough calculation).
- Comparing different options can save you thousands. Shopping for life insurance can be tedious, but you can do it online. Enter your personal information – and obtain an online quote in minutes. You can also gain comparisons from several different companies, and add and eliminate benefits and options you might not want, or need.
- Find out what cover you need. If you don't have any life insurance in place, it can be difficult to know where to start, particularly with the many policies available on the Australian market. Before you start to compare policies you should understand the difference between direct and underwritten life insurance policies, as premiums can vary greatly.
How is life insurance paid for?
Some other important things to keep in mind when looking for high levels of life insurance include:
- Life insurance and income protection insurance are two completely different types of insurance. Life insurance is meant to pay a lump sum to your beneficiaries should you die whilst the cover remains effective. Income protection insurance actually pays you while you are still alive but unable to attend work because of illness or injury. Although you remain alive you still need to earn an income while incapacitated otherwise your family would suffer the same financial fate as if you had died. For this reason they are both very important and valuable documents that will make hard times that much easier financially.
- The amount of premium you pay for either of these insurances will depend on your age and the amount of cover you require. It is often argued that the least amount of cover you need for adequate life insurance cover is five times your annual salary. This means that the amount your beneficiaries receive in the lump sum payment they receive on your death should be able to be invested and return a regular amount near what you were previously earning. For instance if you were earning a salary of $100,000 a year you will need to take a minimum $500,000 cover.
- If you have an independent income stream such as that coming from a business you are involved in you may take another approach. You can take out sufficient insurance to clear all your debts such as your mortgage, credit cards and any personal loans you may have. For instance, if you have a mortgage of $300,000, personal loans of $150,000 and credit card and funeral costs to cover, you will still require a life insurance cover of around $500,000.
- Your income protection insurance will return you up to 75% of your average annual salary in a monthly payment while you are unable to earn an income because of illness or injury. You will be able to choose when you want these benefits to start as well as how long you want them to be paid. Your decision, along with your age will determine the amount of premium you will be asked to pay.
Both level and stepped premiums are good options, but of course it depends on each individual situation. It is important to carefully assess your current financial situation and choose the most appropriate premium style that you afford, in the short or long run. Should you be wishing to have cover over the long term, level premiums will the more affordable option.
Just remember that when you have already found the life insurance policy you need, be sure that you understand the limitations of the policy before you affix your signature on the dotted line. If there are some parts that are not clear to you, ask for clarifications so you know what and what not to expect from your life insurance policy.
Is it possible to get life insurance for over 60 with no medical?
All life insurance companies require applicants to declare any pre-existing medical conditions prior to taking out cover. Failure to do so may lead to the policy being rejected at claim time.
With the likelihood of conditions increasing in later years, most insurers will require applicants over 60 to submit a medical exam regardless of whether or not they declare they have a pre-existing condition. This is to account for the additional risk that they present to the insurer. If the applicant has a pre-existing condition, the insurer will generally either:
- Automatically cover the condition
- Cover the condition but apply a premium loading
- Adjust the policy so that any claim related to the condition is not covered
- Choose not to cover the applicant
If you have struggled in the past to find life insurance due to a pre-existing condition, you may wish to consider cover options that require very little or no medical underwriting whatsoever. These include:
Should I use an adviser to get cover?
There are two options when choosing life insurance cover: purchase direct life insurance straight from an insurer, or choose tailored life insurance through an adviser.
Skipping an adviser can be quick but here's the catch
Direct life insurance is designed to make it quick and easy to take out cover, with fast application online or over the phone and minimal medical underwriting. However, as a result of this streamlined process, direct life insurance does have some shortcomings. Direct life cover is sold on a “one size fits all” basis rather than tailored to suit the needs of each individual applicant. It also has much stricter limits on the cover entry age, so if you’re over 60, it may not be possible to find cover with some insurers.
Using an adviser
If you’re looking for a tailored package, your best bet is to speak to an adviser. An experienced adviser will take the time to assess your financial situation and personal circumstances to help you determine the type of cover you need and how much. They will then be able to help you sort through the myriad policy options available and choose one that matches your needs and budget.