Do I still need my life insurance?

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 $15,000¹. 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 your insurance to matches your current circumstances. For example:  

•    Personal circumstances: have you paid off your mortgage or have your children become financially independent?
•    Policy expiry age: life insurance cover often decreases or 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 90. 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.

¹ Paying for your funeral - Moneysmart.gov.au