Life Insurance and Longevity Risk

The long-established pension age of 65 will be only a memory within the next century, experts say, with Australians expected to be working well into their 90s by 2100.

Melinda Howes, chief executive of the Actuaries Institute, predicts that Australians who are now 65 will live until they are 86 (men) and 89 (women). But by 2050, she expects those ages to be 92 and 93, respectively.

In 2010, more than 3 million Australians were older than age 65; that number could reach almost 8 million by 2050.

Howes’ predictions come in the wake of a white paper released in May 2013 by the Actuaries Institute, “Australia’s Longevity Tsunami,” which credited ongoing medical breakthroughs with the longer life expectancies.

“You just have to look at the advances in the research of chronic disease in the past 10 years, and newer advances such as 3D printing,” Howes told the Australian Financial Review. “I would suggest we’ll see the printing of 3D organs within our lifetime, and potentially in the next 10 years.”

Howes believes that the life expectancy for Australians by 2100 could be 100, 120, or even older, which means a retirement age of 90-plus is a definite possibility.

Lawrence Tsui, a global products actuary at Swiss RE, also addressed longer life expectancies at the Actuaries Institute summit at which the white paper was discussed.

Tsui credited new medical technology for the expected “tsunami”, particularly the application of stem-cell therapy to serious medical conditions, noting that products already are available for treating cancer and diabetes.

With Australians expected to live longer, there will be a need to work longer in order to support themselves. And where there is a dependency upon income, there is also a need to protect agains the loss of that income due to illness or accident.

Personal insurance products such as life insurance, income protection and trauma insurance have long played a vital role in protecting Australian families against financial difficulty. As life expectancies increase the relationship between Life Insurance and Longevity Risk will only increase.

Life Insurance provides financial relief in the form of debt reduction and ongoing income for the surviving family members.

Today many Income Protection policies will pay a benefit up to Age 70 when the life insured suffers a long term illness or accident. They also have inflation protection to ensure your standard of living doesn’t deteriorate over the long term.

Trauma Insurance provides a lump sum payout upon diagnosis of 40+ medical conditions, such as cancer, heart attack and stroke. The funds can be used to access cutting edge medical treatments and cover out-of-pocket costs such as travel, rehabilitation, paid help, etc.

We can help

miPlan’s life insurance specialists are experts at developing personal protection strategies that work over the long term. Get started with our online calculator and quote tools or contact us today and one of our friendly experts will be glad to help.