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.
Receive a quote from these direct insurers
Who is Eligible to Apply 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 for 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 $1,000,000 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.
|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 for Seniors?
Finding low cost life insurance for seniors can be challenging, but it is still possible to find an affordable policy. There may be some restrictions in features and extra benefits on offer, and cost for a plan will be higher due to the increased level of risks that seniors carry. Therefore, it is essential that you take the time to do your research on the variety of plans that are available for seniors. Compare as many policies and quotes as possible so you can find the most suitable policy to your needs with a price that is just right for your budget.
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 i.e. 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.
Features to Consider when Making a Senior Life Insurance Comparison
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.
- Level or stepped premiums: Depending on your age or circumstances you may choose stepped or level premiums to pay for your policy. Stepped premiums will start out very cheap, and increase each year as you get older. Level premiums will stay the same throughout the life of your policy, so you do not have to reconsider your budget at later stages. If you are taking out a seniors life insurance policy at a relatively young age, level premiums would probably suit you best, as you plan to be paying for your policy through your 50s, 60s, 70s and beyond. However, if you are taking out a policy late in life, and don’t expect to be paying premiums for decades, then stepped premiums may be an affordable to begin with, and you won’t have to worry about the high costs in 10 or 20 years time.
- 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:
Tips to Compare Seniors Life Insurance
- Obtain quotes from multiple providers: With some insurance companies charging as much as 50% more than others per year, make sure you compare quotes with each provider to ensure you are getting the best deal possible.
- Choose a provider with financial strength: Make sure that you do your research into the insurance company's background before you decide to buy their product. Look for details such as the company's history, awards, customer service and claims process.
- Compare features and benefits of the policies: It is essential to find out which events the policy will or will not cover you for, with the benefits and features that are provided in the policy. 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. Can often be a great benefit to choose whether to pay your premiums either monthly or annually. Annual payments be lower than monthly payments.
Is Funeral Insurance More Suitable for Seniors?
With guaranteed acceptance usually offered to age 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.
Life Insurance Benefits
- Lump sum benefit provided to beneficiaries
- Premiums are generally lower than life cover
- Cover expenses after your death and pass on legacy to loved ones
Life Insurance Drawbacks
- Coverage is quite expensive, especially if the applicant has pre-existing medical conditions
- Benefit usually paid after the funeral. Can cause financial strain for family members in the interim
- Potential pressure on living expenses for pensioners on a limited fixed income
Funeral Insurance Benefits
- Simplified claims process. Benefit is paid quickly
- Guaranteed acceptance usually provided to age 80
- Increased benefits of up to 3 times the normal cover amount may be offered for death by accident after first 12 months
Funeral Insurance Drawbacks
- Medical examination is usually required
- Premiums increase with age over time
- If you live for 5-10 years longer than expected, you may end up paying more cost of the funeral in premiums
- With most policies only covering accidental death in first two years, death from terminal illness may not be covered
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 percent 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
It is important to bear in mind that if you are being offered life insurance from a company that you have not heard of before and the plan that they offering perhaps sounds too good to be true, in terms of the benefits it offers compared to the price being charged - the chances are it is too good to be true! You should never take any chances with something as important as life insurance and if you have any doubts at all, you should postpone making any commitments until you have delved into matters more deeply, which means doing things such as researching the provider, checking reviews from other customers, etc.
In order to ensure that those you leave behind are properly protected and that you are not wasting your money paying premiums on a life insurance policy that does not even exist, it is important to take measure that will help you to avoid life insurance scams. There are a number of important measures that can help you to avoid falling victim to a life insurance scam targeted toward seniors, which includes:
- 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
If you’re still not sure whether you should be taking out seniors life insurance as you get closer to retirement, here are all of your questions answered:
Life Insurance for Older Buyers: Frequently Asked Questions
Q. Why Would I Take Out Protection?
- A. If you become sick or injured, or in the event of your death, your family isn’t burdened with your final expenses, funeral costs, bills and other debts.
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.
As we get older, we think more and more about who and what we are leaving behind, and what sort of legacy we want to leave for our family and future generations. Therefore, if you want to make sure that your family is looked after when you’re gone, that you and your partner can live a stress free retirement protected against illness and injury, and that you leave a legacy which speaks of care and planning, rather than financial stress, you need to consider seniors life insurance.