Life insurance for seniors
Can senior Australians and residents take out life insurance?
Life insurance is available to most senior Australian citizens (typically between the ages of 60 and 74), and depending on any pre-existing conditions which may impact their ability to get cover. In some cases, you may be required to take a medical exam or have blood tests during your application, but this is relatively common even when purchasing cover earlier in life. The cost of your premiums depends on various circumstances, such as your current health status, medical history and how much life insurance cover you need.
Both permanent residents and those living in Australia who intend to apply or are eligible to apply for permanent residency may be eligible for life cover; however, there may be different application and procedural assessments, which are dictated by each insurer, so it’s important to check these with each life insurer if you’re considering taking out cover.
Expert tips on life insurance for seniors
Our life insurance expert, Steven Spicer, understands just how important life insurance can be for Australian seniors, which is why he’s put together these tips to help you choose a policy that works for you.
Steven Spicer
Executive General Manager – Health, Life & Energy
Consider optional features
The base policy you choose may not include everything you require. However, some providers allow you to choose additional features such as funeral insurance, total and permanent disability cover, trauma protection and an accidental death benefit. Consider this when comparing policies.
Be honest with your insurer
There are several factors that affect premiums, including your health status, age, gender and medical history. It’s important to be completely honest about all these factors when searching for a life insurance policy to ensure you and your dependants are adequately covered if a claim needs to be made.
Think carefully about your cover amount
When setting a cover amount always consider factors such as your income, health status, assets, any personal savings and the dependants who rely on you. This can help you determine if the cover amount you’ve selected will be sufficient if a claim is made.
Life insurance as you age
For seniors, life insurance costs can depend on many factors, such as the life insurance provider, the type of policy you choose and your level of cover. Generally, life insurance premiums tend to get more expensive as you age. For example, someone who lives a dangerous or unhealthy lifestyle could end up paying more for their policy than someone who is older.
The underwriting process differs between life insurance companies, so it might be a good idea to compare quotes from multiple insurers to find the best life insurance policy for you.
Do I need life insurance after retirement?
While there’s no simple way to answer this question, it’s always wise to consider your circumstances without forgetting about your family’s future and livelihood. If your family’s finances are in order and you’ve taken your household debt into consideration, you may only require a low level of life insurance cover, if you need it at all.
You may want to take out life insurance after retirement for a variety of reasons:
- Your family are dependent on your financial contributions to pay debts and living expenses.
- Your children require ongoing financial support due to medical needs or school/university fees.
- Your spouse or dependants would require financial assistance to cover funeral costs (in the event of your death) or legal fees.
- You want to give your family an inheritance to invest in their future.
Does your life insurance expire after a certain age?
Another component of life insurance you need to be aware of is your policy’s expiry age. These age limits vary between insurers and policies, but generally:
- Term life insurance expires at 99 years of age
- Total permanent disablement (TPD) insurance expires at 65 years of age
- Trauma insurance expires at 70 years of age.
These expiry ages are a guide only. It’s important to always read the relevant Product Disclosure Statement (PDS) to find out at what age your cover may become void or change to a different type of cover.
Which life insurance options are available to seniors?
There are several different types of life insurance available. Each type of cover varies in its purpose, conditions, payout type and maximum entry age limit. Four of the most common life insurance options are:
Term life insurance
A term life insurance policy makes a lump sum payment to your beneficiary in the event of your death. It’s suitable for people wanting to ensure their family is provided for after their death or to cover their medical bills if diagnosed with a terminal illness. A term life insurance policy only covers you for a set period of time (e.g. 30 years or until you turn 99).
If you took out life insurance before it was discontinued in 1992, you might be on a whole life insurance policy instead, which covers you for your whole life and accrues a cash value that can often be withdrawn during your lifetime. You can no longer take out a whole life insurance policy, so keep in mind that if you’re switching insurance, you’ll be moving to a different type of cover.
Total Permanent Disability (TPD) insurance
TPD pays you a lump sum of money if you’re permanently disabled and are unable to return to work, which can go towards expenses like treatment and rehabilitation or to compensate for lost income. It can be taken out with your life insurance policy or as a separate policy. Some TPD insurance products will also pay out a death benefit if you die before claiming on the policy.
Trauma insurance
Also known as critical illness cover, trauma insurance pays a lump sum if you’re diagnosed with a serious medical condition. There are many medical conditions that could fit the criteria of a trauma event, including cancer, circulatory diseases and nervous system diseases. Each policy will specify exactly which conditions are covered and the level of severity that needs to be met.
Funeral insurance
Sometimes called burial insurance or final expense insurance, this type of insurance pays a lump sum that can go towards funeral expenses in the unfortunate event that you pass away. Generally, you don’t require a medical exam to take out this type of insurance, although it usually comes with a lower coverage amount.
Meet our life insurance expert, Steven Spicer
As the Executive General Manager of Health, Life and Energy, Steven Spicer is a strong believer in the benefits of private cover and knows just how valuable the peace of mind that comes with cover can be. He is passionate about demystifying the health insurance industry and advocates for the benefits of comparison when it comes to saving money on your premiums.