INSURANCE AFTER 50 - WHAT YOU REALL NEED TO KNOW

As we get older, the topic of insurance can feel like a bit of a puzzle. Do we still need it? Is it worth the cost? Should we keep paying premiums into retirement? These are all great questions, and in a recent podcast, financial experts tackled these concerns, helping Australians over 50 understand their insurance options. Let’s break it all down in simple terms.

What Type of Insurance Are We Talking About?

First off, this isn’t about car, home, or travel insurance. The discussion here is about personal insurance—things like life insurance, income protection, trauma insurance, and total and permanent disability (TPD) cover. Many Australians may already have these policies inside their superannuation, but as retirement approaches, it's worth reviewing what’s necessary and what’s not.

Do You Still Need Life Insurance?

Life insurance pays a lump sum to your beneficiaries if you pass away. Generally, people take out life insurance to cover debts, provide for young children, or replace lost income. By the time you reach your 50s and 60s, your mortgage may be smaller, and your kids may be financially independent. However, if you still have a home loan or dependents (such as a spouse relying on your income), life insurance can be useful.

If you’re paying for life insurance through your super, check your balance. Premiums can eat away at your retirement savings. The good news? You don’t have to cancel it completely—you can reduce your coverage over time to lower the cost.

Income Protection: Should You Keep It?

Income protection insurance pays you a percentage of your salary if you can’t work due to illness or injury. It’s great while you're working, but once you retire and no longer earn an income, it’s no longer necessary.

For those in their 50s who are still working, it's worth reviewing your policy. You can adjust the waiting period (how long before you receive payments) or the benefit period (how long you’ll be paid). These tweaks can help lower your premiums while still keeping some level of coverage.

Trauma Insurance: Is It Worth It?

Trauma insurance pays a lump sum if you suffer from a serious medical condition, like cancer, a heart attack, or a stroke. It’s often one of the most expensive types of insurance because it’s highly likely to be claimed.

As you get older, premiums increase significantly. If you have a family history of serious illness, keeping this cover might give you peace of mind. However, if the cost is too high, you might consider reducing the cover rather than cancelling it outright.

Total and Permanent Disability (TPD) Cover

TPD insurance pays a lump sum if you become permanently unable to work due to illness or injury. Many people hold this type of cover inside their superannuation, but it’s important to check whether it covers your specific job or any type of job. If you're retired, this insurance may no longer be necessary.

What Happens to Insurance in Retirement?

Once you retire, you may not need all these policies anymore. Some insurance types, like income protection, automatically end when you stop working. Others, like life and trauma insurance, can continue as long as you keep paying premiums. However, those premiums get more expensive with age. If you’re retired and living on a fixed income, you’ll need to weigh the cost of insurance against its benefits.

One important tip: Before cancelling any policy, get a health check. If a medical issue is discovered, you may still be able to claim under an existing policy. Once you cancel, you won’t be able to reactivate the cover.

Final Thoughts

Insurance is all about managing risk. The key takeaway is that you don’t have to go all or nothing—you can adjust your cover to suit your changing needs. Reviewing your policies with a financial adviser can help you make informed decisions without wasting money on unnecessary premiums.

Disclaimer: The information provided in this article is general in nature and has been prepared without considering your personal objectives, financial situation, or needs. It does not constitute financial advice. Before making any decisions, you should assess its appropriateness and seek professional financial advice tailored to your circumstances. Additionally, ensure you review the relevant Product Disclosure Statement (PDS) before deciding on any financial product.