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Life Insurance Over 50

Mitch Ramsbotham

Financial Expert Updated on June 20, 2023

i Disclosure statement

For individuals over 50, life insurance may seem like an unnecessary waste of money since many people nearing retirement will have access to their superannuation entitlements. 

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However, given the average life expectancy of Australians is at a record high of 82.9 years, reaching your 50s means that you still have almost half your life ahead of you. For this reason, life insurance may be just as important as it was in your 30s and 40s.

This article discusses over 50s life insurance policy, why it is essential, and what you should consider before taking out a new insurance policy. These options may include TPD insurance (total permanent disability), trauma insurance, and funeral insurance available to seniors.     

Life Insurance for Those Over 50: What Is It and How Does It Work?

Whether you are in your 20s, 30s, or 50s, the concept of life insurance remains the same.

Life cover’s sole purpose is to provide financial benefit and security to your family and loved ones if you pass away. Insurance may also be needed once diagnosed with a terminal illness through a medical exam and given a limited time left to live. 

However, it’s also important to understand how the other types of life insurance work:

  • Trauma insurance: provides a financial benefit if you suffer a severe injury/illness
  • TPD Insurance: provides a financial benefit if you become disabled and unable to work again
  • Income protection: provides a financial benefit if you are unable to work for a period of time due to illness/injury

Life cover, often known as term life insurance or death cover, provides a lump sum payment if the insured passes away or is diagnosed with a terminal illness where death is diagnosed to occur within 24 months. 

A Life Insurance Policy is an agreement in which an insurer agrees to pay a specified cover amount to a beneficiary after the person’s death. Life insurers and life insurance companies agree to pay the benefit amount.

Life insurance lump sum payout can be used to assist grieving loved ones with funeral expenses and burial costs. Consider the need to pay off any outstanding debts and ongoing household expenses. 

Why Do You Need Life Insurance Over 50?

There are many specific reasons why you might want life insurance at this age.

One of the main reasons to consider life insurance if you are over the age of 50 is to ensure that you have peace of mind knowing your family is secure and taken care of in the event of your death. 

Additionally, you may still have unpaid debts or mortgages that need paying (by your family) after your passing.

Even though you are at a later stage in your life, you may still be planning to work for a significant period of time and still have financial responsibilities. This is why many Australians over 50 decide to keep their existing life insurance policy.

It is always advantageous to be prepared for the unexpected, and life insurance provides an emotional benefit to policyholders as well as a financial benefit to your loved ones.

With the policy terms providing benefits to cover things like the costs of your funeral, medical and other household bills and living expenses, the life cover provided by the insurance policy terms will be a great help to your family and loved ones during an unfortunate event.

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Useful Types of Life Insurance Features People Over 50 Should Consider

Some of the features and options available with life insurance policies for over 50s include:

  • Terminal illness benefit: If you’re terminally ill, with no more than 12 months to live, a benefit amount is payable to help you and your family
  • Funeral expenses benefit: Most life insurance companies offer a specified amount of cover payable in advance to cover any funeral-related expenses
  • Financial planning benefit: This covers the cost of getting financial planning advice upon the payment of a life cover benefit
  • Guaranteed future insurability: Amend your cover and enjoy guaranteed acceptance should your circumstances change due to a specific life event, without having to provide further medical evidence.
  • Interim accidental death cover: You and your family members may be eligible for insurance while your application’s being assessed. A benefit amount is payable should you claim during this time.

How Much Should You Be Covered For?

As a general rule, the level of life insurance cover that you would require will depend upon your financial and family situation.

Your policy’s payout should be large enough to cover the cost of replacing your income, plus a little extra to ensure that the rising costs of living and inflation are taken into account.

Other factors that should be considered when calculating the level of cover required include. 

  • Your Income – If you are the primary breadwinner of your household, you will generally require a greater level of cover. Without your income, your family will struggle to meet its day-to-day expenses. 
  • Your Dependents – A large family with multiple children will require a greater level of cover than someone who has no dependents or a smaller family. 
  • Your Expenses – If you have a mortgage or ongoing expenses where you need to make monthly repayments, you will require a greater level of cover than someone who does not. 
  • Your Assets – You will not need a large amount of coverage if you have substantial assets that produce income or could be sold to cover expenses. However, if your asset holdings are small, this may mean you need a higher level of cover. 
  • Funeral Costs – Funeral costs are often forgotten about when considering life insurance options. However, many life insurers recommend including a portion of money for funeral costs within your life cover policy.

The factors outlined above largely depend upon your stage of life, meaning that age is undoubtedly an essential factor to consider when calculating the level of coverage you will need. 

Your insurer’s target market determination (TMD) will determine if the policy is suitable for you. TMD must be according to your needs, based on your goals and financial situation. 

How Easy Is It to Get Life Insurance When You’re 50+?

Obtaining over 50s life covers is naturally more challenging than in your younger years.

As age increases, so do monthly premiums, as does the likelihood that you will suffer from a medical condition that can exclude you from some insurance policies. 

Factors That Affect Life Insurance for Over 50s

Regardless of age, the same personal factors are considered by insurers in determining eligibility for life insurance coverage. These include:

  • Age
  • Gender
  • General health, including any pre-existing medical conditions
  • Smoking status 

For those in their 50s, these factors become even more relevant, as people of this age are generally more likely to make a life insurance claim. 

According to one of Australia’s leading insurer’s 2017 claim statistics, AIA indicated that 35% of customers who made a life cover claim were over the age of 55.

Death Cover Claims by Age
Pre-existing Medical Conditions

Providing answers to medical questions or disclosing the details of any current or past medical history and conditions is extremely important, particularly as you age. 

You may not be able to claim benefits right away if you have a pre-existing condition or are sick when you take out private health insurance. A waiting period like this prevents individuals from filing a claim and subsequently dropping their insurance.

Non-disclosure of pre-existing conditions, or even medical conditions you have subsequently fully recovered from and no longer require any treatment, can result in the rejection of a claim.

Most insurers consider a pre-existing medical condition to be a medical condition that existed before you entered the agreement with the insurer and purchased the life insurance policy. 

A pre-existing medical condition could be something that is now resolved. A pre-existing medical condition may even have little to no impact on your current health. It could be something that remains unresolved and requires ongoing treatment. Either way, disclosure to your insurance provider is essential. 

How Much Does Life Insurance Cost Over 50?

Life insurance premiums and costs naturally increase with age. However, just because you are aged over 50 doesn’t mean life insurance is unaffordable. 

Average monthly insurance premiums for people aged in their 50s range from approximately $122 – $593 per month, with these figures based on approximately $500,000 worth of cover.

There is no set formula for calculating premiums and life insurance costs. Each insurer has eligibility criteria related to personal circumstances and level of cover, which can mean significant variations between policy costs. 

Why Is Life Insurance Over 50 More Expensive?

The age of a person is taken into account by life insurance providers as in general, the older you are, the more likely you are to make a claim on your policy.

However, if you have an existing life insurance policy, the cost may not be as high.

Generally, newly issued life insurance policies for term life cover become more costly once you hit 50. Once you enter your 60s, you may have no other choice but to buy a more expensive life policy if you need or want life insurance. Most insurer providers do not sell term policies to people over 65.

What Can You Do if You Have Been Refused Insurance?

Sometimes, an insurer will, unfortunately, refuse to insure you. The refusal can be due to many factors, which mean that you do not meet the eligibility criteria that the insurer has set in place. 

Should this occur, several options are available to you.

  1. Firstly, discuss the refusal directly with the insurer. Perhaps the rejection can be resolved and is a result of misinformation. Either way, approaching the insurance provider will provide some clarity. 
  2. Should you not be satisfied with the insurer’s refusal, you have the option to ask for the matter to be reviewed. This situation may again lead to a resolution, or it may not. 
  3. Explore life insurance coverage options in your superannuation fund. You may have the option to increase or adjust your cover to your personal circumstances.
  4. You can choose to work with an insurance broker, a financial adviser or an Insurance Specialist to help you increase your chances of being accepted cover. Personal advice on your situation and eligibility criteria may increase your chances of acceptance.
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Does Life Insurance Expire After a Certain Age?

Not many life insurance policies cover an individual for their whole life with the exception of whole life policies – but these are not available in Australia anymore. The only way you can hold a whole life policy is if you owned one before 1992 and have maintained it since.

The reality is, however, that term life insurance policies do expire.

The good news is that the expiration age for most policies is 100, so well above the average Australian life expectancy of 82.9 years. 

However, every policy is different with different T&Cs so be sure to check the product disclosure statement.

4 Tips for Securing the Best Over 50s Life Insurance Policy

Affordable and cost-effective life insurance is still certainly possible for people in their 50s. Our top tips on securing the most cost-effective policy include:

  1. Do Your Research

By comparing funds, you may be surprised how much you can save. Even if the premiums are only a few dollars different per month for the same level of cover, this can lead to significant savings over time. Compare life insurance quotes from Australia’s leading and best life insurance companies. 

2. Consolidate Policies

If you have multiple policies in place, such as total permanent disability (TPD) cover and Trauma Cover, for example, look at combining these policies together with one insurer, which can save you money in premium costs. 

3. Double-Check Your Super

Many Australians hold insurance through their Super fund. There is no point in having multiple policies and paying various premiums. Complete a thorough review of your life insurance in your superannuation fund to ensure you’re not duplicating costs.

4. Get Help

Seek professional advice to find a policy that is right for you. Engaging the services of an insurance broker or specialist who will find the best policies available for you in your circumstances can also save you considerably.

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Different Ways You Can Pay For Life Insurance

There are several payment options available for life insurance. Payment options depend greatly upon how you have purchased your life insurance. 

  • Purchase directly through a life insurer: if you have purchased life insurance directly from an insurer. In that case, you will make a monthly premium or an annual premium directly to the insurer. 
  • Purchase through your super fund: by comparison, if you choose to purchase insurance through your superannuation, or in a combined policy with other insurance options such as total permanent disability (TPD) and Income Protection Insurance, then the premium can be paid from your superannuation balance. The benefit of making payments through your superannuation is that you keep more money in your pocket. It becomes a more cost-effective option, particularly for those in their early 50s and several years of retirement age. 
  • Purchase through a financial adviser: with a financial planner, you can choose how you want to pay for your insurance policies. An adviser will normally recommend the most cost-effective way to pay for your situation.

Additionally, you can choose what premium types you would like:

  • Stepped premiums are when the cost of your insurance is recalculated each year depending on age on the anniversary of your policy. Generally, stepped premiums are less expensive initially and become more costly as you get older.
  • Level premiums are calculated based on your age when any coverage begins. When you first get your policy, level premiums are more expensive. However, these premiums do not increase with age.

What Other Types Of Insurance Might I Consider If I’m Over 50?

Life cover is not the only type of policy available for those over 50. Other types of insurance that are relevant to people at this stage of life include:

  • Total Permanent Disability Cover
  • Income Protection Insurance
  • Trauma Protection and Serious Trauma Protection
  • Accidental Death Benefit
  • Funeral Insurance

All of the insurances listed above, whilst available to over 50s, do have restrictions related to the maximum age at which a person can obtain a policy and a policy expiry age. 

For example, income protection insurance, which may be still relevant for those continuing to work, can usually be purchased until the age of 60. However, the expiration of the policy is 65.

Every policy is different. When considering what insurance products are suitable for you and your needs, it is essential that you review the policy’s relevant product disclosure statement (PDS). The PDS contains vital information including the terms and conditions of each policy. 

Purchasing a life insurance policy over the age of 50 is a big decision.

A wide range of life insurance products are available for people even over 65. Life insurance protects you in uncertain circumstances but over the age of 50, it’s vital you seek the best life insurance policy for you because the cost can vary significantly.

Do your research and seek qualified financial advice. Take the stress and hassle out of securing the best life insurance quote at this time from a reliable insurance company with an ABN (Australian business number). 

Still not sure where to start, or want help securing the right insurance faster? 

That’s okay!

Many people may be unaware of this…but just like you, 41% of Aussies intend to get financial advice rather than going it alone, according to an Australian Securities and Investments Commission (ASIC) report.

You can reach out to My Money Sorted to guide you for free before you seek professional advice from an insurance expert!

When you book a call with My Money Sorted, you’ll:

✓ get a better understanding of your money matters

✓ have an idea of your money goals

✓ be matched with the right insurance expert who can help simplify your search for an insurance policy that fits your needs

My Money Sorted is your stress-free pathway to getting ahead with your money. Here’s what your journey will look like:

Step 1: Start off with a quick money matters session with My Money Sorted

Step 2: Get matched with a Insurance Expert that’s right for your money situation

Step 3: Take the first step towards getting the protection you need with a clear and sound roadmap prepared by an Insurance Expert

It’s that easy!

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References

  1. Deaths in Australia https://www.aihw.gov.au/reports/life-expectancy-death/deaths-in-australia/contents/life-expectancy 
  2. Life insurance contracts https://www.aasb.gov.au/admin/file/content105/c9/AASB_1038_09-05.pdf 
  3. Factors affecting life insurance quote https://www.investopedia.com/articles/investing/102914/7-factors-affect-your-life-insurance-quote.asp 
  4. How Age Affects Life Insurance Rates https://www.investopedia.com/articles/personal-finance/022615/how-age-affects-life-insurance-rates.asp 
  5. What is the best life insurance for people over 50 years old? https://www.guardianlife.com/life-insurance/over-50 
  6. Why you may need life insurance after age 50? https://www.guardianlife.com/life-insurance/over-50 
  7. Waiting Period and exemptions https://www.health.gov.au/health-topics/private-health-insurance/what-is-covered-by-private-health-insurance/waiting-periods-and-exemptions# 
  8. How Age Affects Life Insurance Rates https://www.investopedia.com/articles/personal-finance/022615/how-age-affects-life-insurance-rates.asp 
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