As we age, our financial needs and priorities often change. For those aged over 65, the question of maintaining life insurance can be particularly pressing. This article explores some factors to consider when deciding if life insurance is still necessary in your golden years.
Assessing your current situation
• Dependents: If you still have dependents, such as a spouse, children, or even grandchildren who rely on your income, maintaining life insurance can provide them with financial security.
• Financial obligations: If you have outstanding debts, such as a mortgage or personal loans, life insurance can help cover these obligations.
• Funeral expenses: Funerals can be costly, with expenses potentially reaching $10,0001. Life insurance can ensure that these costs are covered, alleviating the financial burden on your family.
Evaluating your existing cover
It’s important to review your insurance cover regularly, but especially important as you get older, to ensure that when your circumstances change, (such as paying off your mortgage), that you review your insurance to match your current circumstances. Other examples include:
• Policy expiry age: life insurance cover often ends at a certain age. The expiry age usually differs by cover type, for example your income protection policy might cover you to age 65, while your life insurance cover might expire at age 100. That’s why it’s important to check and understand the limitations of every policy you hold.
• Policy costs: As you age, the cost of maintaining life insurance can increase significantly. It’s essential to weigh the benefits and need of continued coverage against the rising premiums. If the premiums are straining your budget, it might be worth discussing affordability options with us. These options could include reducing how much you’re covered for, removing extras you no longer need, or opting out of automatic inflation adjustments.
Things to consider
When evaluating your existing cover there are other factors you could consider, such as:
• Existing savings or investments: If you have substantial savings or investments, you might be able to self-insure. This means relying on your assets to cover any financial needs that arise, rather than a life insurance policy.
• Downsizing and debt reduction: If you’re able to reduce your living expenses by downsizing your home or paying off debts this could help decrease your need for life insurance.
Making an informed decision
Ultimately, the decision to keep, change or cancel your life insurance policy should be based on a thorough evaluation of your current financial situation and personal needs. Consulting with a financial adviser can help you make the best choice for your circumstances.
1Funerals: The cost of dying - Consumer NZ
What you need to know
Resolution Life Australasia Limited ABN 84 079 300 379, NZ Company No. 281363, AFSL No. 233671 (Resolution Life) is part of the Resolution Life Group. The content on this website is for information only. The information is of a general nature and does not constitute financial advice or other professional advice. Before taking any action, you should always seek financial advice or other professional advice relevant to your personal circumstances. While care has been taken to supply information on this website that is accurate, no entity or person gives any warranty of reliability or accuracy, or accepts any responsibility arising in any way including from any error or omission.
Preparation of this document and the opinions expressed in it may involve material elements of subjective judgement and analysis. Unless specifically stated otherwise they are current on the date of this document and are subject to change without notice.
