Life insurance provides a lump-sum payout to you if you become terminally ill, or to your family when you pass away. The process starts by getting approved by a provider and then setting your benefit amount (how much you want your family to receive). This will vary depending on the exact insurer you choose – you might be asked to undergo a medical test before taking out cover, or your benefit amount may be capped depending on your age bracket.
What does life insurance cover?
Life insurance covers death by any cause, although suicide is usually excluded for a set period of time. That means your family will receive a pay out if your death is related to an event such as:
- medical complications
- natural causes
- acts of violence.
Life insurance also covers you for terminal illnesses, so you can access your benefit amount if a doctor concludes that you will likely pass away in the near future. Although every provider has their own criteria for a terminal illness, the diagnosis from a doctor is usually at having 12 months or less to live in order to claim.
It’s important to remember that every life insurance policy has specific exclusions and limits. Make sure you read the Product Disclosure Statement carefully to know what you’ll be covered for and what limits are placed on your cover.
Is life insurance for seniors different?
Some insurers offer policies designed more closely for seniors. For example – some policies let you apply for cover at an older age than others, or even offer specific discounts. Depending on the insurer, you may be able to apply without going through the usual hassle of a blood test or medical exam.
Find out more about how life insurance works for seniors >
What should you check before getting life insurance in your 50s, 60s, and beyond?
If you’re considering life insurance, the first thing you should check is whether you already have cover. Despite decades in the workforce, a lot of us don’t realise that life insurance is sometimes included in our superannuation fund. However, keep in mind that life insurance through your super isn’t always tailored to your exact needs, which could mean you are under-insured. You should contact your superannuation provider to check how much you may already be covered for.
Don’t forget to review any other insurance policies you have in case you are already covered for your expected needs. It’s also important to understand any limitations when claiming on more than one policy with the same insurer.
Finally, don’t forget to consult your loved ones when considering life insurance. The amount of cover you need will depend on what your plans are for their future, and whether they could manage financially if you passed away. Without a financial safety net, your family may need to make some lifestyle changes. This might include relocating, downsizing and selling the family home, or even postponing their retirement.