Do seniors need life insurance?

One of the biggest misconceptions about life insurance is that it suddenly becomes unnecessary once you reach a certain age. The reality is that life cover can be a useful tool, no matter your age.

Seniors often face unique financial hurdles – think mounting medical bills, ongoing mortgage repayments, or the need to plan ahead for funeral costs – that don’t simply vanish in retirement. If you’re one of the over 4.3 million Australians who are now aged 65 or over, you might be wondering, ‘do seniors need life insurance?’.

In this blog, we’ll explain what seniors’ life insurance entails, the types of cover on offer, and the key considerations that can help you choose the right policy.

What types of life insurance are available to seniors?

When looking for life insurance for seniors, you might come across several. Each can serve a slightly different purpose, so understanding these distinctions can help you pick the right policy for your needs and budget.

• Life insurance: Life insurance policies offer a lump sum payment to your beneficiaries if you pass away or are diagnosed with a terminal illness. When applying, you’ll have the opportunity to choose a cover amount, which may be limited by factors like your age, income and underwriting outcome, which usually depends on the policy and insurer. Some providers offer optional benefits like Total and Permanent Disability Insurance (TPD) and Serious Illness cover, Some providers offer joint policies to cover your partner, and may even allow you to add your children as well.
• Term life insurance: Term life insurance is a policy that covers you for a specified term and often up to a certain age. If you pass away or are diagnosed with a terminal illness during this term, a lump sum benefit is generally paid to your beneficiaries. Term life insurance policies sometimes allow you to add extra benefits, such as trauma insurance or total and permanent disability (TPD), depending on the insurer’s offerings. These extras can affect your life insurance cost, so be sure to check the product disclosure statement (PDS) carefully.
• Funeral insurance: Funeral insurance is a form of life insurance intended to cover immediate end-of-life expenses. Premiums are often lower, and the cover amount is usually in the range of $3,000 to $15,000. If your main concern is funeral costs – or if you do not want a large lump sum payout – this could be a straightforward way to ensure your loved ones do not have to worry about covering funeral expenses.

When comparing these options, consider your health status, smoking status, and any medical conditions, as these factors can influence how much you pay in premiums. You might also need to decide between stepped premiums, which start lower and increase with age, or level premiums, which stay more consistent over time.

Life insurance for over 50s

For many Australians, your 50s can be a transitional decade. Your children might be more independent, your mortgage might be close to being paid off, or you might be in the process of switching from full-time work to part-time roles or early retirement.

While some people believe they no longer need life insurance at this life stage, there are still reasons to consider having life insurance in your 50s and beyond:

• Outstanding debts: Even if your mortgage is nearly cleared, you might have other debts like credit cards, personal loans, or other commitments to meet.
• Funeral costs: Taking out life insurance for seniors could help cover your final expenses so your loved ones don't dip into savings to pay for your funeral.
• Financial security for a spouse or partner: If you're still working and relying on a source of income, a life insurance policy can ensure your spouse can maintain their lifestyle if you pass away unexpectedly.

Many insurers in Australia provide a straightforward application processes for people aged 50 and over. It’s best to always check age limits, as some policies only accept new applicants up to a specific age.

Life insurance for over 70s

By the time you reach your 70s, you might assume life insurance is no longer necessary – or potentially not even an option.

Although with some policies it can be more challenging and possibly more expensive to get life cover in your 70s, some insurers offer policies to applicants up to the age of 79. However, if you're interested in a policy like term life insurance, check the maximum entry age before applying.

Keep in mind that the premiums for life insurance for seniors typically rise as you age and if you’re navigating certain medical conditions. Some policies require a medical exam or detailed health questionnaire, while others might have more flexible underwriting but offer lower levels of cover.

You could also consider if your main concern is paying for your final expenses.

The factors to consider when comparing life insurance for seniors

Ready to weigh up your life insurance for seniors policy options? Here are six important factors to consider when comparing policies.

How much life insurance might I need?

Figuring out how much life insurance you need as a senior depends on your individual financial responsibilities and goals. You may want to ask yourself:

• How much debt do I still carry? Even if your house is fully paid off, you may have other liabilities – like credit cards, car or personal loans.
• What future expenses might my family face? If you still have dependants, could they cope without your income? If so, for how long?
• Do I want to leave a financial gift or legacy? Some seniors see life insurance as a way to leave a lump sum for a child, grandchild, or spouse.
• How expensive are end-of-life arrangements in my area? Funeral expenses can range anywhere from $4,000 to $15,000, depending on the type of service you select.

Remember that the greater the benefit amount, the higher your life insurance premium is likely to be. If you’re uncertain, chatting with a licensed financial adviser may give you a better idea of what policy and level of cover is right for your unique situation.

Do I need life insurance after retirement?

Retirement often marks the end of full-time work, which can mean reduced or no regular income. But that doesn’t automatically mean you no longer need life insurance coverage.

Whether you still need a policy after retirement can depend on a range of factors, such as whether you’re paying down debts, need to support your partner financially or expect to encounter future healthcare costs.

If your financial circumstances are more secure – for example, you have no major debts, sufficient investments or savings, and no one relying on your income – you might decide life insurance after retirement is no longer needed. Ultimately, it comes down to personal choice and a clear assessment of your finances.

Why would someone over 60 need life insurance?

For many Australians, 60 is the new 50. You may be semi-retired, working part-time, or simply adjusting your lifestyle. Here are a few reasons why someone over 60 might still opt for life insurance:

• Cover funeral costs: Even a modest policy can help protect your estate and loved ones from immediate funeral expenses.
• Support a dependent spouse: If you’re worried about your spouse managing day-to-day living expenses or healthcare costs, life insurance can provide them with a financial buffer.
• Leave a legacy: Many seniors want to leave money behind for their children, grandchildren or even a charity. A life insurance policy can be a tidy way to ensure this legacy is in place.
• Protect assets: If you still have a mortgage or you’re helping family financially, a life insurance payout can safeguard those assets.

Final words: Is life insurance for seniors worth it?

Ultimately, deciding whether life insurance is worth it for seniors will depend on your age, financial situation, lifestyle, and personal goals. For some, having a policy in place ensures funeral costs are covered, outstanding debts are handled, and family members do not have to worry about immediate expenses during an already difficult time. For others, paying premiums in later life may not make sense if they have sufficient assets, no dependents, and no pressing financial obligations.

Yet many Australians find comfort in knowing there is a safety net. If you are worried about your spouse maintaining the family home or if you want to ensure your children will not have to draw on their own savings to cover your funeral, a life insurance policy can help ease some of those concerns. In moments of grief, having a payout available can relieve financial stress – helping loved ones focus on healing and celebrating the life you shared together.

Keep Reading: New to insurance? Learn everything you need to know with our guide to making a life insurance claim.

Do you want to start assessing your life insurance options as a senior? Choosi makes it easy to compare different policies from a range of trusted brands, so you can find the right life insurance cover that suits both your needs and your budget. Take the next step, gather a few quotes, and compare the details. That way, you can make an informed decision about whether life insurance is right for you and your loved ones.