Insurance through life: Retirement

This is general advice, intended to help you understand what is available, what questions to ask and key factors to consider – you need to seek advice from an insurance adviser before buying insurance.

As we age, our lifestyle, finances and health keep changing, and your insurance needs to do the same. Understanding the way insurance works at the different stages of your life means you can make informed decisions about which policies to keep, which need adjustment, and which no longer serve a purpose.


Retirement can look very different depending on your health, age and financial situation, but what is consistent is that you are no longer actively generating income as a part of the workforce.

Some people will be mortgage free, and others will have a much lower mortgage. Some people will have made the move to a retirement community, others could be renting or living in the family home.

Some policies are no longer available as you age, the premiums for others become prohibitive, and there are those that need some adjustment to make sure they are still fit for purpose and work within a changing budget.

Lump sum insurance policies

These insurance policies pay out a lump sum in the event of an accident or certain illnesses. Deciding which of these you still need, and how much cover to have, is dependant on your circumstances. These decisions are helped by discussing your situation with an adviser.  

Life insurance

Many people in retirement, especially those without dependants, drop this cover entirely, and others choose to keep just enough cover to pay funeral costs.

Trauma insurance

Trauma cover, with lump sum payments in the case of specific injuries and illnesses, can be a useful option in this life stage. This lump sum can be used however you see fit, which could be anything from treatment, a caregiver or renovations to a home to accommodate changed mobility needs.

Retirees usually have a set budget, knowing it will meet their needs for a defined period. Going through a major health issue could mean significant additions to monthly outgoings – such as the cost of travel, care or accommodation, and this can put stress on the budget. Having access to cash from a trauma pay out means not dipping into retirement savings for this. It also means if you don’t have health insurance, you still have access to some cash for treatment – without using retirement savings.

If you have a standalone trauma policy it expires when you turn 70, however if it is accelerated and linked to a life insurance policy you can keep it for as long as you keep the life policy. If you have your life and trauma cover on a level term policy (which you may have chosen to redirect your income cover towards at the end of your career) it can make the premiums more manageable.

An accelerated or linked trauma policy means you have an insured sum that you use for either a life claim or a trauma claim. For example, if you have $100,000 sum insured and make a $50,000 trauma claim, the remaining $50,000 would be paid as a life insurance claim.

Health Insurance

Health insurance is critical at this stage, and this is the period you are most likely to use it. Having the right policies in place can save you from having to choose between lifesaving treatment and digging into your retirement nest egg.

Should a life-or-death need arise, you want to avoid having to choose between extending life and expending your savings. Health insurance can solve this dilemma by covering treatment costs. While the premiums also rise as your risk to insurers increases, there are a number of different ways to manage this, including increasing your excess or reducing what you are covered for.

The key to having the insurance you need at any life stage is to keep talking to your adviser. Advisers understand the ins and outs of policies across different providers and can advise on how to use these to your advantage to get the best cover at every stage.

A note on estate planning

If you are heading towards retirement and don’t have an up-to-date will or enduring power of attorney set up, now is the time to get this taken care of. Estate planning is looking after the people we care about when we move on. It makes things easier by ensuring your assets and any taonga are allocated as you wish, and that someone you love and trust is able to make decisions for you if you are unable to make them yourself.

If want to discuss whether your current insurance is still fit for purpose or find out how to reduce premiums while retaining cover get in touch with one of our advisers.

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