Benefits of Life Insurance as You Get Older

Are you covered for a rising age and declining health?

In March 2024, the world was shocked to learn that two British Royal family members were suddenly diagnosed with cancer. This highlighted a universal fact—disease does not discriminate and remains a threat to us all … even royalty.

As we all work towards a long and happy retirement, the question must be asked: Are you financially prepared for a critical illness?

Medical advancements are a blessing, allowing us to live longer (though not necessarily healthier) lives.  However, this can also present a challenge: the potential for rising health-related costs throughout an extended retirement.

The question becomes: How can we strategically plan for our future health-related needs without jeopardising our retirement savings? After all, living a long life shouldn’t come at the expense of financial security.

Understanding the risks

Unfortunately, even well-planned retirements can be upended by critical illnesses. With age, the likelihood of developing severe health conditions significantly increases.

We live our whole lives preparing for a restful and relaxing retirement, but it’s worth understanding the risks we incur as time goes on. Age comes with complications, so we need to ensure we are covered.

Is medical aid sufficient?

While many people depend on their medical aid to cover all healthcare costs, there can be limitations.

Medical aid and gap cover is great, and typically covers most in-hospital expenses—but realistically, there are caps and restrictions. Cancer treatments, for example, have a financial cap, and the costs beyond this are out of pocket.

They will generally also only pay for approved treatments and procedures, and even though they might be available elsewhere, experimental treatments typically aren’t covered at all.

The financial burden extends beyond hospital stays. Out-of-hospital costs like palliative care, rehabilitation services, and home modifications are often partially covered, or not covered at all by traditional health insurance.

These essential services can quickly add up, creating a significant financial strain if not planned for in advance. Without proper provisions, a long life with increasing healthcare needs could erode your retirement savings.

In addition, medical aid membership can be costly—especially in retirement, creating a conundrum as the need for cover increases with age. More may need to be done to bridge the gap.

How can life insurance bridge the gap?

There is a worrying trend whereby people are prioritising investments and retirement provisions over risk protection like life cover and critical illness cover.

A comprehensive approach to managing potential costs associated with critical illnesses is more appropriate, which includes medical aid, gap cover, and at least R1 million in critical illness cover. Whole-of-life critical illness cover is also strongly recommended, instead of ending it at age 65.

Many life insurance options offer cost-effective solutions to make provision for additional and ongoing funds for a critical illness which has a long-term lifestyle and financial impact.

They are designed to keep you protected as you get older. Our ultimate goal is to never let our cover run out, so it pays to be partnered with an insurer who gets that.

Ultimately, even people who have prepared well for retirement can find their savings depleted by a critical illness. It’s therefore always worthwhile to consult with an accredited financial adviser to put a holistic financial plan in place.

WRITTEN BY STEPHEN VAN NIEKERK

Stephen van Niekerk is an insurance specialist.

While every reasonable effort is taken to ensure the accuracy and soundness of the contents of this publication, neither writers of articles nor the publisher will bear any responsibility for the consequences of any actions based on information or recommendations contained herein.  Our material is for informational purposes.

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