Life Insurance Blog

Life Insurance Policies: Baby Boomers Retirement Plans are at Risk


As more and more baby boomers enjoy their retirement years, there is growing concern that many are neglecting the importance of maintaining their life insurance policies.

A recent study by leading insurer TAL found that in the 50+ age group:

  • Only 1 in 4 have Life insurance
  • Less than 1 in 10 have Trauma Insurance or TPD Insurance

Considering that the average baby boomer will live at least 20 years in retirement (with many living 30 years or more) the financial burden caused unexpected death, accident or illness could have a major impact on their lifestyle in retirement.

To help protect against financial setback, all baby boomers should consider maintaining some Life Insurance, TPD insurance and Trauma Insurance; at least through the early years of retirement.

When considering life insurance options, baby boomers should keep the following in mind …

The likelihood of an insurance claim Increase with age

Until someone discovers the elusive fountain of youth, it’s an unfortunate fact of life that the more we age, the higher the likelihood of physical ailments.

In a 2012 report titled “Cancer in Australia”, the Australian Institute of Health and Welfare, stated that “the risk of developing cancer before the age of 85 years was 1 in 2 in men and 1 in 3 in women.”

Access Economics “The Generation Risk” report in 2010 estimated that “more than 2.5 million Australian baby boomers will have a heart attack in the next five years.”

Someone who chose to buy life insurance at a young age, then let the policy lapse, may find that they aren’t covered for these unexpected health problems.

The financial cost of tragedy

As the statistics above demonstrate, the risk of unexpected death, illness or accident increase dramatically as we age.

Coping with such tragedy will always be difficult, but the stress can often be amplified by the increased financial burden such events cause.

Funeral, medical, probate, rehabilitation and travel expenses are just a few of the costs that can accompany death and illness.

A 2007 report by Access Economics found that the average out-of-pocket expenses incurred by households in which a member had contracted cancer was $47,200, but that costs could be as much as $200,000.

For most Australians, $50,000 is a lot to lose. But for those close to, or in retirement, unexpected costs of this magnitude can have a major impact on their lifestyle.

Life Insurance Premiums Increase with Age

Life Insurance companies decide the cost of a life insurance policy based on the likelihood the policy holder will make a claim. It is logical, therefore, as we age, premiums will go up.

If, in your younger years, you were smart enough to take out a life insurance policy with Level Premiums, which stay constant with age, you should hang on to that policy for as long as you can.

For baby boomers who don’t already have adequate levels of insurance in place, the following questions can help ensure you find affordable life insurance and keep it for as long as possible:

How much do you really need?

Often this is less than you think. By conducting a proper needs analysis you can avoid paying for unnecessary cover.

Do you need all the bells and whistles?

It might be feel good to drive an Audi, but a Hyundai will get you to the same destination for about ½ the price. Likewise, many life insurance products have extra features that, in reality, rarely get used.

By doing your homework and choosing a product that covers just the fundamentals, you can reduce costs significantly.

How’s your health?

After helping so many clients with their insuranace needs, we know most people have something in their medical history that could impact their ability to obtain the cheapest life insurance available. It is, therefore, very important to know what assessment a life insurance company will make before submitting your application.

How much are you willing to pay?

Cheap life insurance is a relative term. If you knew tomorrow you would be diagnosed with cancer, then today you would take any life insurance and trauma insurance policies you could get.

And ask yourself this question. How much would you be willing to pay for a guarantee you would never suffer cancer, heart attack, stroke, etc? If you were to take this money and spend it on personal insurance, then you’re effectively guaranteeing the most positive outcome in all possible scenarios.

How we can help

Our life insurance specialists have years of experience helping clients find the best life insurance policy to meet their needs. And in the unfortunate event of a claim, we’re here to ease the burden and ensure your best interests are looked after.

If you’d like assistance with your personal insurance needs, contact us today and we’ll be glad to help.


Stephen Handley
Stephen Handley
My name is Stephen Handley. I have over 20 years experience in IT, Project Management and Financial Services. By combining this experience, I hope to make it easier for Australians to find good quality and affordable life insurance. Furthermore, I am not connected to any life insurance company. So, in the unfortunate event of a claim, you'll have someone in your corner, representing your interests.