Looking for affordable senior life insurance policies or to review your existing cover for a better option?
Senior life insurance is an important consideration for those entering or in their retirement years. Your financial obligations may have changed since the earlier stages of your life but there are still key reasons to have cover in place to avoid passing on any financial burden to those you love most. Life cover can offer a financial safety net to ensure that in the event of your death cover will be in place to take care of any final expenses or debt you may have remaining.
- Trauma and TPD Insurance can also be worth considering at this age to ensure that in the event of serious illness or injury, you, your partner or family are not put under great financial stress to manage the medical expenses
- Cover can generally be taken out until age 80 with cover remaining in place until age 100
- It could be worth reviewing your current policy with a consultant to switch to something more suitable ... doing so could literally save you hundreds each year
This guide will discuss the different types of insurance worth considering for seniors and offer guidance on how to compare different policies available.
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Who is eligible for seniors life insurance?
The maximum age that seniors can apply for cover will really depend on the type of policy that they decide to go with. This may vary between providers but generally the following rules apply.
- Life Insurance. Maximum entry age of 75 with an expiry age of 100.
- Income Protection. Maximum entry age of 60 with an expiry age of 65.
- Trauma Insurance. Maximum entry age of 64 with an expiry age of 70.
- TPD Insurance. Maximum entry age of 64 with an expiry age of 70.
- Funeral Insurance. Maximum entry age of 80 years.
What types of life insurance are available to seniors?
- Life cover. Life insurance for seniors comes in the form of term life insurance. Your nominated beneficiaries will receive a lump sum payment upon your death if you die within the policy term. This means that you can leave your loved ones financially secure when you are no longer around to provide for them or take care of them.
- TPD cover. Provides a lump sum benefit for permanent or partial disablement. Definition of disablement may vary between insurers so it is important to determine when a benefit will be paid. The benefit may be used to cover everyday living expenses and costs associated with rehabilitation. This cover can be purchased as standalone cover or bundled with the life cover policy.
- Trauma insurance. Provides a lump sum benefit if the insured suffers a medical condition specified in their policy. May be especially useful for those entering their later years that are more susceptible medical events occurring. This cover can be purchased as standalone cover or bundled with the life cover policy.
- Funeral insurance. While the benefits of a life insurance policy can be used for various purposes other than paying for the funeral expenses, the payout from funeral insurance is usually used for covering the costs associated with a funeral. Most policies will allow applicants to take out between $1,000 and $30,000 in cover.
- Income protection. With an expiry age of 65, income cover will only be relevant for applicants of this age bracket. Income protection insurance provides a lump sum benefit of up to 75% of the insured's income with some policies offering up to 85% if the additional portion is contributed towards a superannuation fund.
How much does seniors life insurance cost?
This pricing table below shows the results of a Rice Warner study showing annual premiums from different life insurance companies in Australia. Quotes are based on annual premiums for non-smokers with $1 million of life cover. It is important to note that premiums may change dramatically based on the policy chosen and the individuals characteristics. This table should only be viewed as a general guide.
|Age and gender||50 year old Male||50 year old Female||60 year old Male||60 year old Female|
|Provider 1 Rate||$1,310||$1,076||$3,975||$2,675|
|Provider 2 Rate||$1,462||$1,056||$5,708||$3,789|
|Provider 3 Rate||$1,793||$1,296||$6,735||$4,264|
|Provider 4 Rate||$1,589||$1,151||$5,796||$3,625|
|Provider 5 Rate||$1,816||$1,285||$6,215||$3,898|
|Provider 6 Rate||$1,727||$1,303||$6,591||$4,221|
|Provider 7 Rate||$1,730||$1,269||$6,554||$4,135|
|Provider 8 Rate||$1,644||$1,219||$5,911||$3,617|
(Copyright, Rice Warner, 2008, Date Last Updated 01/01/2014)
Life insurance premiums are calculated based on different risk factors a person is exposed to. An insurer will use the criteria below to determine the premium payable.
- Age. With most types of insurance, the older you are, the higher your premiums will be. When you apply for cover in your senior years, you can expect the premiums you pay will be more expensive compared to people that apply for cover when they are young. This is due to age related health risks.
- Gender. Men typically pay more in premiums than women because statistics have shown men have a lower life expectancy.
- Smoking status. If you are a smoker you will usually pay two to three times more in premiums than a non smoker. To be assessed as a non smoker for insurance purposes you will have to have stopped smoking for 12 months.
- Medical history. A standard risk means you are in generally good health, and can qualify for a lower premium, even if you have minor health issues such as high blood pressure or high cholesterol. However, if you have a number of pre-existing health conditions, your premiums may be higher.
- Family medical history. Your insurer may ask details of any medical conditions of your immediate family members. This may include heart disease, cancers, diabetes, mental disorders etc
- Pastimes. Insurers may ask if you are involved in any hobbies or pastimes that may increase the likelihood of a claim.
- Occupation. If still employed, the nature of your occupation may also lead to an increase in premiums if your insurer deems it to be higher risk.
Is it possible to find cheap life insurance as a seniors?
Life insurance gets more expensive the older you get. However, some key steps to find affordable cover include:
- Take the time to research what cover is actually suitable for your needs
- Determine an adequate level of cover based on your existing financial obligations
- Take steps to improve your health. Giving up smoking may lead to a reduction in premiums in the future
- Consider funding cover through your superannuation. If you already have life cover in existing super funds, consider consolidating funds to avoid paying multiple fees
- Look out for special offers and discounts offered by the insurer to cut your premium
- Consider how your premium is structure and paid to reduce the overall amount
- Receive assistance from an insurance consultant to help you find and compare different policy options
What expenses can seniors life insurance cover?
The benefit payment from a seniors life insurance benefit may be used for a number of remaining expenses. This may include:
- Any outstanding mortgage and smaller personal debts e.g. credit card debt
- Funeral costs
- Financial planning benefit to be used by your partner
- Legal fees
- Creation of instant estate
- Deliver a legacy to pass on to family members or charity
Cover from a Trauma or TPD benefit may be used for:
- Modifications to your home. As you get older or you suffer an illness or injury, you may need to install ramps or safety features to aid your mobility, and these modifications and additions can be costly work, carried out by qualified tradespeople.
- In home assistance. You may also need to cover the costs to have someone visit you regularly in your home for health and personal reasons, or you may need to employ someone full time.
- Ongoing medical needs. Even if you suffer an illness or injury, there are often ongoing costs associated with these treatments which can be costly.
- Nursing home. If you are unable to stay in your home, you may need to move to a nursing home which often requires a buy-in amount, and ongoing expenses.
What should you look for in a seniors life insurance policy?
Some key features to consider when looking at seniors life insurance plans include:
- Premium freeze. Insured may select to pay the same premium that was paid the previous year by reducing the sum-insured before the policy anniversary date.
- Benefit indexation. The sum insured on your policy will automatically increase each year by the consumer price index or 5% to ensure your cover keeps pace with inflation.
- Guaranteed future insurability. Enables you to increase the level of cover on your policy without undertaking another round of medical underwriting
- Interim cover. Will provide complimentary interim life cover while application is being assessed by insurer.
- Funeral advancement benefit. Will make an advance payment (usually to a maximum of about $20,000) to your nominated beneficiary to assist with funeral expenses.
- Financial planning benefit. Will provide an advance payment to cover any legal or estate planning costs.
Benefits and drawbacks of life insurance for seniors
Taking out life cover can see like just another thing to organise, when all you want to do is relax and enjoy planning your retirement. However, there are some important benefits and limitations you should consider when looking at seniors life insurance:
Should you get funeral insurance?
- Obtain quotes from multiple providers. Don't get ripped off. Compare a number of quotes to ensure you're getting the best deal.
- Choose a policy backed by a bug name. Make sure you do your research into the company's before you buy your policy. Look for details such as the company's history, awards, customer service and claims process.
- Compare features and benefits of the policy. It's essential to find out what events are covered. Read the product disclosure statement (PDS) to help you decide whether the life insurance plan is suitable for you or not.
- Premium payment options. Find out whether your policy includes flexible repayment options.
Is funeral insurance a better choice for seniors?
With guaranteed acceptance usually offered to those under the age of 80, funeral insurance can be a more suitable option for those looking for those that have been unsuccessful in taking out life cover in the past and don't require a significant amount of cover. Most funeral insurance policies allow applicants to take out between $1,000 and $30,000 in cover.
As mentioned above one of the best things about funeral insurance for the older buyers is that you won't be refused cover even up to age 80, no matter what your health, lifestyle or gender and you can take out a joint cover with your spouse if you wish. Some insurers offer seniors two choices, an age based premium option or a fixed premium option:
- The age based option is cost effective earlier on but as you age the premium cost automatically increases. The cost can become quite substantial as you get older but as you're committed you have to persevere, or otherwise find some other way of paying your own funeral costs, which many older people can't manage. Age based premiums are automatically increased by 5% each year to keep pace with the rise in funeral expenses.
- The fixed premium option is fixed at the time of taking out the cover and it will always remain the same. It's dearer than the age based option initially but if you live on to a ripe old age it becomes cheaper in comparison to the age based option at that time.
Tips to help you avoid life insurance scams
- Make sure you use a reputable provider. In this day and age, it has become increasingly important to use a reputable company, with the existence of fly-by-night companies and scam artists. A well known, regulated insurance provider cannot take the risk of deceiving its valuable customers, so you will have far greater security when you choose a company that is well known, reputable and regulated.
- Do your research. Research counts for a lot when you are doing something as important as choosing a life insurance provider and plan. You should therefore take the time to research any provider or plan you are considering, which means looking at customer reviews, finding out more about the provider if you are not familiar with it, and even comparing different plans and providers so you can boost your chances of getting a good deal from a reputable provider
- Ask questions. Since you will be paying for the privilege of having life insurance cover, you should not be afraid to ask questions for clarification and peace of mind. If you have any questions or are uncertain about anything, make a list of questions to ask the provider, from queries that you have about the plan itself to questions about the provider, its background, its policies, and anything else you want clarification about
- Don't rush into anything. Many seniors make the mistake of rushing into a decision or feeling pressured into making a decision when it comes to life insurance cover. However, this can increase the chances of you making a costly mistake. Take some time to think about your choice before you make any commitment and if necessary seek advice from professionals or even family members so that they can look over the plan and provider you are considering for additional peace of mind.
Frequently asked questions
Q. Should I take out seniors life insurance even though I’m healthy?
- Even if you’re healthy you’re not immune to accidents, and no one knows what the future has in store. Therefore, it is best to take out life insurance as early as possible, when you are less of a risk to the insurer, and your premiums will be lower.
Q. What is included?
- Depending on your insurer, you can have extras such as accidental serious injury insurance, and total and permanent disability insurance, so you don’t have to die to receive a benefit payout.
Q. Who can apply?
- Generally any Australian resident who is aged between 50 and 79 can apply for a policy. In most cases you won’t need to have a blood test or a medical exam. Then, as long as you continue to pay your premiums on time, you are guaranteed to have your cover renewed each year.
Q. Am I covered everywhere?
- As seniors are more active than ever before, the chances are good that you’ll be doing some travelling in your retirement. Therefore, you will generally be covered no matter where you are in the world, as long as you remain an Australian citizen.
Q. Can I cover my family too?
- Most seniors policies will also allow you to add your partner and your children to the policy. In most cases you can cover as many dependents as you like, up until they turn 21.
Q. What will the premiums cost?
- A. Most policies will have fixed premiums, so you won’t have to pay any more as you get older. Plus, there is likely to even be a premium waiver feature, where you don’t have to pay any more premiums once you turn 90.