Live longer, save on insurance

I reckon there's a lot to celebrate about getting older - the joy of watching our kids grow up, having plenty of life experience to draw on, and surprisingly, valuable savings on insurance premiums.

Let me explain that last point. A colleague of mine recently turned the big 5-0. It wasn't a milestone she particularly relished, that is until her comprehensive car insurance renewal arrived. The annual premium was considerably lower than in previous years thanks to the driver turning 50.

Interestingly, age-based discounts are also becoming available on life insurance.

MLC Insurance for instance, recently announced discounts on life cover with savings of up to 15% from age 45. It's a great idea - live longer, save on insurance.

In fact, from our forties onwards, life insurance plays an especially valuable role in a sensible financial plan. 
Between the ages of around 40 and 50 we often face significant financial responsibilities - paying off a home, funding a quality education for our children, and aiming to grow investments for retirement.

In many cases the combined income of two people is the thing that keeps household finances ticking over. This is why it's so important to review your life cover annually - if anything happened to either income earner, your family could be left financially skewered.

Many people assume they have sufficient life insurance through their super fund. But that's not always the case. The amount of life insurance provided by super funds is often less than $200,000. For many families that wouldn't be enough to pay out a home loan let alone provide long term financial security.

Buying life insurance outside of super lets you tailor the policy to the needs of yourself and your family, so you can be quite sure you have adequate and appropriate protection. Directly held life policies can also have extras like a funeral benefit.

Ratings group Canstar recently reviewed directly held life insurance and found ANZ and Insure Me Now offer good overall value. However it's a question of comparing insurers and policies to see what works best for you and your family.

You can download Canstar's life cover report from www.canstar.com.au.  Or speak to your financial adviser for a review of your life insurance needs. Having complete protection can cost less than you expect. 

Paul Clitheroe is a founding director of financial planning firm ipac, Chairman of the Australian Government Financial Literacy Board and chief commentator for Money Magazine.


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