Baby boomers, are you cancelling your cover too early?

New Zealand had the second largest rate of workforce participation of people aged 65 or over in the OECD. Every year, Kiwis’ life expectancy increases by about a month. We are all living longer than ever before and many people are working past retirement age – sometimes out of necessity, sometimes because they enjoy what they do. Whatever the reason, retiring at 65 is no longer “the dream” nowadays as we potentially have 30 odd more years to live.

A lot of our financial advisers work with baby boomers. Some of them are business owners who expect to sell up to fund their retirement. They might also have expected that their kids would be grown and living away from home by the time they are in their late 60s. However, with the rising costs of living these days, the reality is that most of these baby boomers are sitting on a significant amount of debt and with children that are still living with them. As a rule, we should insure for the situation we are in now, and not based it on the estimated projected value of our business or assets.

It is also a fact that insurance premiums go up significantly when you hit 50+. This is only because the probability of making a claim is much higher. Statistics from NZ’s largest life insurance provider show that sixty-somethings account for the second highest claims in total for life and health insurance. In 2017, they also paid out over $9 million in trauma insurance claims (eg cancer, heart attack, stroke) for this age group.

It is easy to think that cancelling our insurance cover and banking that monthly premium would help with managing family expenses. But would it be worth it? If you still have debt and working for an income – if you have dependents – what would happen if you didn’t have insurance to fall back on? Do you want to be forced to go into your retirement savings and push back your retirement date even further?

We understand that it can be challenging to manage insurance premiums. But it could be even more challenging to manage your finances when your health deteriorates. A good financial adviser can provide options that work for you – cancelling is not the only way. Level premium is one way to control the costs of premiums. Contact us if you want to find out more.


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