At a glance:
- You can still get income protection after 60, but your options may be fewer, and the cost may be higher.
- Whether you need it depends on your situation—like if you’re still working or have bills and dependents to support.
- Many policies stop at age 60 or 65, and may have more exclusions and limitations.
- Before making the decision, it’s important to weigh in the pros and cons as well as the benefits and premiums.
Income protection insurance helps replace part of your income if you’re temporarily unable to work due to illness or injury. For working professionals in their 20s, 30s, or even 40s, the need for this kind of insurance might seem clear. But what about when you’re over 60?
The relevance and accessibility of income protection changes as you age. So, there’s no straight “Yes” or “No” answer to whether or not you need income protection insurance when you’re over 60. It depends on your circumstances and financial situation. If you are still working and have ongoing financial commitments, such as a mortgage, then income protection insurance could provide you with the peace of mind.
In this blog, we’ll help you figure out if you can get income protection at your age, whether or not you need it, the pros and cons of it, and how to obtain it when you’re over 60.
Can You Get Income Protection When You’re Over 60?
Yes, you can get income protection insurance at age 60. However, there are some limitations and important considerations to be aware of:
- Eligibility Age: Most insurers in Australia allow new income protection policies for individuals up to age 60, with only a few, like Aspect Underwriting, allowing policies for individuals up to age 65. After that, your options become very limited.
- Expiry Age: Even if you’re approved, the policy may only cover you until age 60 or 65, depending on the insurer and product.
- Medical Underwriting: At this age, you’ll likely face stricter health assessments. Pre-existing conditions can lead to more exclusions or increased premiums.
- Higher Premiums: Premiums increase significantly with age, reflecting the higher risk of health issues that could lead to a claim.
- Limited Insurer Options: Not all insurers offer cover past 60, so it’s essential to shop around and compare policies designed for older Australians.
If you’re still working and rely on your income to manage expenses or support your retirement goals, acting early is wise. The longer you wait, the fewer options you’ll have, and that too with higher premiums.
Is Income Protection Insurance Right For You After 60?
As you approach your retirement years, concerns about financial stability and income security often come to the forefront. One significant consideration during this stage of life is whether to invest in income protection.
If you’re over 60 and considering income protection insurance, here are some important questions to help guide your decision:
What is your employment status?
Some retirees work for personal fulfilment, while others work due to financial needs. If you’re in the latter group, income protection insurance becomes vital for you. It helps maintain cash flow if illness or injury prevents you from working.
How is your health/medical condition?
As people age, the likelihood of developing health-related issues increases. Income protection can be particularly valuable in covering medical expenses and maintaining financial stability if you’re unable to work due to health conditions. However, it’s important to disclose all relevant medical information during the application process, as non-disclosure of medical history is one of the common reasons why income protection claims get rejected.
Do you have financial dependents?
Consider whether you have dependents who rely on your income. If your ability to earn stops unexpectedly, income protection can help maintain the financial support they depend on, covering essentials like bills, education costs, or mortgage payments.
How close are you to retirement, and what’s the status of your retirement savings?
If you’re nearing retirement, each year of income is important, especially if you’re paying off a mortgage, supporting your family, or growing your super. An unexpected illness or injury could cut that short and force you to dip into your savings early. The role of income protection insurance in retirement planning is crucial. It can prevent the need to tap into your retirement savings prematurely in case of unexpected income loss.
Do you have alternative sources of income?
Diverse income streams like rental income or investments can offer financial stability to those over 60. Having multiple sources reduces the impact of a single income loss and your reliance on income protection insurance.
Do you have existing insurance coverage?
Review existing insurance policies, such as Total Permanent Disability (TPD) or trauma insurance and social security benefits, to understand the extent of coverage and any gaps that income protection could fill.
What are the policy costs and benefits of your income protection insurance?
Assess the premiums of income protection policies and compare them to potential benefits. Consider factors like insured income, benefit periods, waiting periods, exclusions and coverage limits.
What is your budget for premium?
Assess your financial situation to determine what level of premium you can realistically manage for income protection. Balancing premium costs with other ongoing expenses is especially important for seniors. Be mindful of your budget limitations when choosing coverage options.
Pros and Cons of Taking Out (or Keeping) Income Protection Cover at 60
As you approach or pass the age of 60, deciding whether to cancel or continue income protection depends on your health, employment status, and financial needs. Here’s a balanced look at the potential advantages and limitations:
Pros
- Ongoing Income Security: If you are currently working full-time, part-time, or as a consultant, income protection covers you in case illness or injury disrupts your ability to earn.
- Preserves Retirement Savings: Income Protection payout can prevent you from dipping into superannuation or personal savings prematurely.
- Supports Financial Dependents: If you still support a spouse, adult children, or others, income protection helps ensure they’re not impacted by your inability to work.
- Peace of Mind: It offers reassurance during a stage of life where recovery from illness may take longer, and financial setbacks are harder to recover from.
Cons
- Higher Premiums: Policies become more expensive with age due to greater health risks.
- Pre-Existing Conditions: Existing medical issues may lead to exclusions or significantly higher premiums.
- Limited Policy Duration: Coverage may end at 65, limiting long-term value.
- Strict Eligibility Rules: Some insurers require active employment and may not issue new policies once you’ve retired.
- Reduced Coverage Options: Policies for older individuals may come with benefit caps, longer waiting periods or other restrictions.
How to Get Income Protection Coverage When You are over 60
Securing income protection coverage is crucial even after age 60, especially if you’re still working or planning to work part-time into retirement.
While choices may narrow and premiums rise with age, the right policy can offer essential financial protection if illness or injury strikes.
Careful assessment of your circumstances and a clear understanding of the options are key. Follow these steps to find a policy that fits your needs:
Shop Around and Compare Quotes
Before committing to an income protection policy, it’s crucial to explore different options. Obtain quotes from various insurance providers to compare prices and terms.
By doing so, you can identify policies that align with your budget and provide the coverage you need. Remember that prices can vary significantly, so this step can help you find the best value.
Read the Policy Carefully
Thoroughly review the policy documentation, like the Product Disclosure Statement (PDS), before making a purchase. Understand the terms, conditions, coverage limits, waiting periods, and any exclusions that might apply. This attention to detail not only helps you choose the right cover but also lays the groundwork for claiming income protection insurance successfully if the need arises.
Pay particular attention to details relevant to individuals above 60, such as age-related limitations and benefits. Clarify any ambiguities with the insurer to ensure you’re well-informed about what the policy entails.
Ask Questions
If you have any uncertainties or queries about the policy, don’t hesitate to reach out to the insurance provider. Ask questions related to coverage duration, premium adjustments, claim procedures, and any potential age-related considerations.
The best way to ensure whether an insurance product is right for you is to consult an income protection insurance specialist like Aspect Underwriting – someone who can provide independent, quality, and expert advice to help you achieve the best outcome for you and your family. We are also one of the few insurers in Australia who provide income protection for individuals up to age 65.
Entering your retirement years introduces new considerations for income protection insurance. While its necessity evolves with age, your circumstances play a pivotal role in the decision-making process. Balancing factors such as work dynamics, health conditions, and financial commitments is vital.
Comparing quotes, understanding policy terms, and asking questions empower you to tailor coverage to your needs. Despite challenges like age-related premiums and health concerns, insurance options exist for individuals aged 60 and older.
Remember, knowledge is your greatest asset. By acting promptly, you can secure coverage and mitigate rising premiums. Approach income protection with insight and ensure your retirement years are financially secure.
If you still have questions, feel free to reach out to us at Aspect Underwriting.
Mike Wallis
Mike has over 25 years experience, having spent his first seven years working as a Broker at Jardine Lloyd Thomson in Melbourne and in 2002 was transferred to JLT’s Accident and Health Department in London. For four years (2002 – 2005) Mike was a specialist A&H Lloyd’s Broker and during this time developed excellent relationships with the Lloyd’s A&H underwriting fraternity. In 2006 he returned to Australia in a senior broking position with overall responsibility for Placement Strategy, including the implementation of underwriting facilities and the various authorities granted by Lloyd’s. Mike was the underwriter at two specialist Underwriting Agencies prior to founding Aspect Underwriting in 2016.
