WE’RE LIVING LONGER
The National Institute on Aging states that “the dramatic increase in average life expectancy in the 20th century ranks as one of societies greatest achievements”.
Most babies born in 1900 did not live past 50, life expectancy at birth is now between 74 and 83.
We are better informed about our health, diet and lifestyle choices, and advances in medical treatment is also enabling us to live longer.
With longer lives also comes the need for us to plan for longer as well. Where 60 was the retirement age in the 70’s and 65 in this millennium, it may well be 68 or 70 for some of us, sooner than we would like.
PLAN FOR LONGER LIFE
Living longer also means, that our work life may be longer, our financial responsibilities last longer, and debts may be around more than we care for, our mortgages are going to be much larger than our parents (even when adjusted in today’s terms), and our children may take longer to move out of home!
LONGER TERM PROTECTION
A longer life also means planning to keep our insurance protection for longer periods of time, especially when it takes longer to repay larger amounts of debt, and as property prices drive up, mortgages will be substantially more.
PRICE VS COST (THE LONGER TERM VIEW)
Insurers provide special types of life insurance cover for people who need cover for longer. These types of products will end up costing us much less over a longer period of time. The price may be higher at the start, but the overall cost will be much cheaper.
HOW PREMIUMS WORK
Here are some premium comparisons between what an Insurer calls “Level Term” and “Yearly Renewable”. Level Term will start off with a higher premium but will cost you less over the longer term.
The example below is a 40-Year-Old Male, Non-Smoker with an insured amount of $250,000
- Level Term Premium starts at $74.28 per month fixed for 15 years then increases to $88.50 per month fixed to age 65. Total premiums paid to age 65 is $21,295*
- Yearly Renewable Premium starts at $27.42 and increases each year and by age 65 monthly premiums are $315 per month. Total premiums paid to age 65 is $30,175*
This quote has been prepared using AIA’s Level15/80 and Yearly Renewable products quote version AIANB-036-16 V27 and is for illustrative purposes only.*
EACH OF THEM MEETS A NEED
Level Term and Yearly Renewable both have their strengths and each will meet your needs. One is if you can afford to pay more now, the other allows you to insure more for a lower premium now.
Each of these options meets a specific need and comes down to priority, affordability, what your needs are now, and what is your long-term plan. You can even split your cover between both products so you can have cover over the longer term and some cover to be for shorter term.