Securing peace of mind: exploring the importance of life insurance for retirees

26 May 2023

If you’re about to retire – or are a few years off – planning for retirement is essential to having a comfortable and restful post-work life. We need to figure out our timing, what lifestyle we’re considering and how we’re going to fund our retirement and prepare for future living cost increases. We also have to plan and structure our finances for the future. That also includes thinking about life insurance.

If you don’t have life insurance or have a barebones policy through your superannuation, you may be woefully underinsured and underprepared. Here, we discuss why life insurance is important for retirees, even if you think you may not need it.

Secure Your Financial Future: Comparing Life Insurance Quotes

Over the age of 60, you must regularly assess the volume of life insurance you have to plan for the future. You should get as many life insurance quotes as possible to figure out which policy has the best amount of features for the most reasonable price now and as you age out of certain coverage. A good approach is to compare policies with a life insurance broker website such as Savvy, which does a lot of the ‘heavy lifting’ for you.

Why Life Insurance in Retirement Planning is Important

Though you may no longer have any dependents and your mortgage is either settled or almost there, you may think you have no need for life insurance. Some life insurance policies expire when you get to a certain age, such as Total and Permanent Disability, trauma/critical illness, and income protection insurance – usually between 65 and 70.

You may have paid into life insurance with your super fund, which will automatically give you “less coverage for the same price” over time. If this is the case, it may render your life insurance payout almost meaningless, even as a substitute for covering funeral and other costs. Also, your super-based life insurance may make assumptions about you, such as being a smoker and a manual worker, which means paying more for a premium and gaining less benefits.

What To Consider When Choosing Life Insurance

When you consider life insurance policies, you need to assess how much you can afford to pay in premiums versus the coverage it will provide. How much is a reasonable amount to cover funeral or other medical expenses – perhaps lingering mortgage debts – if you suddenly pass away? You also need to see what is included and not included in your premium; if you plan to skydive or parkour your retirement away, some insurance providers won’t cover you for it! You also need to plan for any potential restrictions or waiting periods.

Exploring Different Life Insurance Options for Retirees

Though TPD, trauma, and income protection is off the table post-retirement, you should think about keeping some measure of Term (death) insurance and/or funeral insurance. The latter ensures that your loved ones aren’t out of pocket when paying for funeral expenses. You have to make sure it goes to the right beneficiaries, so discussing this with your broker or provider beforehand is essential.