Insurance when retired. What is required?
During your lifetime, your insurance coverage needs vary depending on where you are in life. For example, if you’re single, but then get married and start a family, your cover needs to change based on those circumstances.
It’s no different when it comes to insurance cover and retirement. Concerns about life insurance cover that you used to have will no longer apply and instead, you’ll have a whole new set of priorities that will need to be addressed.
To help you understand these changes, here are three rules you must follow when considering insurance when retired:
What Is Your Overall Financial Position
When addressing insurance during retirement, the first rule to consider is to get a good handle on your overall financial position. To do so, you will need to include your super and your savings, but there are other things to factor in. For example, you need to consider things like your home and your cars. If an illness or injury happened, would you have enough assets to cover those expenses? It’s important to stay on top of your budget. Using a simple equation, you can take what your needs are and subtract your assets. Use this number to calculate how much insurance coverage is needed.
Is Income Protection Required?
Many people decide to keep working in order to save up more money for retirement. But if you’re still working or transitioning into retirement, the most important type of insurance cover to have is income protection insurance. You will still receive a portion of your salary if you become ill or injured. While you won’t receive 100% of your salary in most cases, it can still help protect you financially. Plus it will keep your retirement goals on track.
Rising Costs Of Insurance When Retired
As you age, the cost of insurance goes up. One of the things you must do is go over your insurance cover to see how much you’re paying compared to the benefit that you would receive. Once you’re retired, life insurance premiums can go up around 20% per year, which means you need to budget for the increase in costs.
Additional tips include making sure that you’re not over-insured as this will cost extra money. Be sure to track how much you’re paying for insurance, if you have coverage, through your super. Since the money is automatically put into your super, it can be hard to tell how much you’re paying.
Finally, meeting with a certified financial planner can help you understand the insurance cover that you currently have and if any adjustments need to be made in order for it to fit into your retirement goals.
Having the correct insurance cover is vital. During your life, your insurance needs change. Even in retirement, insurance should be part of your financial plan. We hope that this article on insurance when retired answered some of your questions. If not, contact Paradise Financial Group today.