Life insurance for over 50s

Two curves cross in your fifties. The amount of cover you need starts falling as the mortgage comes down and the children become independent. The cost of the cover you hold starts climbing steeply, because the annual risk of a claim is rising fast. Left alone, those two curves produce a policy that is both too large and too expensive, and the natural reaction is to cancel it.

That reaction is understandable and usually wrong. The reason the premium has gone up is that claims at this age are common. Trauma claims for cancer and cardiac events, TPD claims from musculoskeletal and neurological conditions, and life claims all rise sharply through the fifties and sixties. Cancelling cover because it has become expensive is cancelling it at the point where it has become likely to pay.

There is a middle path that most people are never offered, because it does not involve selling anything. Reduce the sum insured to what you actually still need. Change the structure. Lengthen a waiting period. Convert part of the cover to level. Any of those preserve an insured position at a price you will keep paying, which is worth far more than a large policy you cancel at fifty-eight.

1. 1Recalculate the need honestly. What is left on the mortgage, and how long until the children are independent?
2. 2Reduce life cover to that figure. Reductions never require new medical evidence.
3. 3Check whether the remaining cover should be level to 70 or 80. At this age level is more expensive but the crossover is closer than you think.
4. 4Keep or increase trauma and TPD rather than cutting them — this is the decade they are built for.
5. 5Look at your income protection benefit period. Many policies pay to 65, which is now much closer than when you bought it.
6. 6Check any employer cover for age-based reductions, which typically start at 55 or 60.

Cover you should not touch

If you were underwritten years ago on terms that would not be repeated today — a health event since, a condition now under management, a family history that has developed — the policy you hold is worth more than its price suggests. That contract was issued on your health at the time, and no insurer can take it back. Reduce it if you must, but do not surrender it.

These are the details that decide whether the cover does what you expected. Read them before you compare on price.

• Whether your policy has a conversion option from stepped to level, and the age at which that option expires.
• Whether trauma cover reduces automatically at a set age, which some policies do.
• Whether TPD switches from own occupation to any occupation at 60 or 65 under your wording.
• Whether income protection to age 65 is still worth the premium given how many years remain.
• Whether indexation is still switched on, increasing both cover and premium at a stage when you may want the reverse.
• Whether an old policy contains benefits current products no longer offer, which is a reason to keep it.

Every New Zealand insurer writes cover in your fifties to its own wording, and the words are where the money is. Two policies that look identical on price can pay very differently when it matters. Closing that gap is the entire job of an adviser.

• Working out which parts of an existing plan to keep, which to reduce, and which no longer earn their place.
• Modelling the cost of holding cover to 70 or 80 under both structures before the option to change disappears.
• Comparing an existing policy against the current market without automatically recommending a switch — at this age, switching often loses more than it gains.
• Checking whether an old wording contains definitions that would not be available on a new policy today.

There are three ways to buy life cover in New Zealand, and they are not equivalent. You can buy direct from one insurer, which means you see one product range and one underwriting appetite. You can buy through your bank, which usually means a single insurer’s product sold under the bank’s brand, often with narrower definitions. Or you can go through an adviser, who quotes several insurers at once and is required to put your interests first.

The premium you pay is the same either way. Insurers build adviser commission into their pricing whether or not an adviser is involved, so going direct does not get you a discount — it just removes the person whose job is to argue your corner at application and at claim time.

• An adviser can see which insurer is currently taking your health history on standard terms, and which one will load or exclude it.
• An adviser can structure cover across two insurers if that produces a better outcome than putting everything with one.
• An adviser handles the underwriting back-and-forth, and is the person who chases the claim when a family is least able to.
• An adviser has to document why the recommendation suits you, which is a written record you can hold them to.

We are a referral service, not an insurer. We do not quote premiums and we do not sell policies. What we do is put you in front of one licensed New Zealand adviser who can compare the market properly.

1. 1

   You tell us what you are looking at

   The form takes about a minute. Nobody asks for your medical history on a web form — that conversation happens with the adviser, properly, and only once you have decided to proceed.

2. 2

   An adviser calls you

   A licensed New Zealand adviser talks through your situation: who depends on you, what you owe, what you already have in place, and what you are actually worried about.

3. 3

   They compare the market

   The adviser quotes across the major insurers, checks which of them will take your health history on the best terms, and puts the options side by side in writing.

4. 4

   You decide, in your own time

   There is no obligation and no cost to you. If the answer is that you already have enough cover, a good adviser will tell you that.