Over 50s Cover Vs Income Protection Some Food for Thought
Some call the over 50s group, the Silver Economy, or Silver Surfers
The group of people that economists have researched and discovered they account for almost half of the entire consumer spending across the UK and think they’re spending the kid’s inheritance.
If you feel you’re heading in that direction, here’s some food for thought about how you could actually protect the next generation of your family’s wealth – with a bit of careful financial planning.
5 Things to Know About Money and Being Over 50
16.5% of people over the age of 50 have at least one dependent child
That’s according to a Press Release by BusinessWire.com on behalf of GlobalData. You may be thinking by that, so what. Not really news! Loads of my colleagues are over 50; they have children and do just fine.
That may be true but what you won’t know about is the personal finances. Many of the parents in the over 50s age group, who are working and have kids at home have some kind of safety net in place with their mortgage provider. Mainly income protection insurance, and if not, they’ll be reliant on a life insurance policy to take care of their family financially if anything happened to them.
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46.5% of over 50s are working
The ONS Working Households report shows 46.5% of over 50s are working. And many of those have dependent children. 28.9% to be precise, according to GlobalData mentioned above. This isn’t so surprising with the high cost of housing and it’s certainly nothing new. Many youngsters are choosing to stay at home with their parents for longer as they go through full-time education, pay for driving lessons, which don’t come cheap, and put money aside to save for a first home deposit. It stands to reason that there are more people over the age of 50 who still have their sons or daughters living at home.
They may not be dependent, but given that they don’t have their own home or mortgage, it will make it more difficult for them to obtain finance from a lender to get financial products. So, while those adult dependents may be thought of as independent, should something happen, you can bank on the fact that they’ll need something to fall back on. In this case, it’s life insurance and not income protection that should be main priority for financial planning.
Around 1 in 20 Over 50s are filial carers
Filial carers are those who provide care to their parents, grandparents or parents-in-law. It’s an under researched group of people, however, the International Longevity Centre did some studying and found that on average, 1 in every 20 adult carer over 50 are filial carers.
This is something that could easily be overlooked, especially in busy family households where there are dependent children and the parents caring for parents. If that’s the case, there are kind of two dependent groups. The child dependent, or the young adult living at home, as well as the financial burden the parents may face with care bills, or the younger of the family needing to step up to fulfil the role as the carer, which could affect the work and/or studying they do.
In this instance, it’d be beneficial to know that there’s enough coverage in the life insurance policy to account for everyone’s financial needs.
Priorities change once you reach 64 years old
Over 50s life insurance is really broad as it covers over 60s too, and there’s cover available for over 65s, all different life stages. Between the ages of 50 – 64, people will be working so will be more active. The 65+ age group are normally retired and often have no mortgage.
The two age groups have substantially different financial needs. The younger group will have more peace of mind knowing the income they work hard for every day is secured should something happen. After retirement though, there’s a focus shift going to happen, so instead of planning for protecting the income available, it’s more about passing the wealth down to the kids and grandkids.
Depending on your current age, it may be worth considering term insurance instead of whole-of-life insurance and then take a more tailored plan when you’re approaching 65 years of age.
Women live 4 years longer than men
Not that you should take a gamble on gender differentials and statistics… The National Life Tables from the Office of National Statistics show that the average age of death is 85 years old for men and 89 years old for women.
Overall, life expectancy has steadily been increasing for the past three decades.
The gender difference isn’t a clear picture though because when you take into account that the vast majority of smokers, who are more likely to die prematurely due to a smoking related illness, more men, are affected. The World Health Organisation reports that men are likely to smoke five times more than women. However, another study measuring the gender difference in quit rate success using a focus group found that after 6 weeks, 61.7% of men were able to completely abstain from nicotine whereas the female group was only a 46.6% success rate.
It’s recommended for women that behavioural therapy and nicotine replacement therapy be used when trying to quit smoking, whereas men appear to be do okay with just nicotine replacement therapy – although both male and females will have a higher chance of successfully quitting with a combination of the two types of treatment.
If there’s a smoker in the household, it will affect life insurance premiums, because it’s likely to affect the life expectancy. Patient.info put it in layman terms when they state:
“About half of all smokers die from smoking-related diseases. If you are a long-term smoker, on average, your life expectancy is about 10 years less than a non-smoker. Put another way, in the UK about 8 in 10 non-smokers live past the age of 70 but only about half of long-term smokers live past 70. The younger you are when you start smoking, the more likely you are to smoke for longer and to die early from smoking.”
When you consider the above five points, you’ll be in a better position to know if you’re best to focus on income protection, or putting a life insurance policy in place, to protect the financial welfare of your dependents and quite possibly take care of your parents care needs should something happen.