Income protection insurance for over 50s

Income protection insurance can be extremely helpful if you need to take time off work due to an injury or illness, especially when you're in your 50s. From mortgage payments and health insurance to school tuition fees, it's likely you have a lot of bills to keep on top of. Find out more about your options below.

Can over 50s get income protection?

Yes. The maximum entry age for income protection insurance is generally 59 or 60. Only a handful of insurers let you take out a policy after you turn 60 so it's definitely worth getting a policy while you're still in your 50s. If you get ill, injured – or in some cases, are made redundant – it can pay you a monthly benefit of up to 75% of your income, straight into your bank account.

It's likely that you'll have to pay higher premiums than if you were younger, largely because as you get older, you're more likely to suffer from poor health. If you have a pre-existing condition, you will also likely have to pay more. In some cases, that condition may be excluded from cover altogether. This means that if you became ill with that pre-existing condition, you wouldn't be able to claim on your income protection policy.

If you're fit and healthy though, there's no reason that you can't find very affordable income protection insurance, especially if you compare policies and shop around.

What are the benefits of income protection insurance for over 50s?

If you rely on your income to pay the bills, income protection is important no matter what age you are. But it's arguably even more essential when you're in your 50s. Here's how it can benefit you.

• Peace of mind. You may have got this far without it, but by the time you reach your 50s, it can be nice to get some peace of mind. You've worked hard and knowing that income protection has your back should something happen is comfort worth paying for.
• It can take care of all your financial responsibilities until you get back on your feet. Whether it's having enough money to keep the kids in the school they go to, mortgage payments or everyday living expenses, you've likely got a fair amount on your plate by the time you're in your 50s. Income protection can pay you a monthly benefit to keep on top of things.
• You don't have to dip into your savings. With income protection, you don't have to worry about an illness or injury disrupting your retirement plans; there's no need to have to fall back on any savings or retirement funds you have.
• Claiming is very straightforward. It's uncomplicated and involves minimum stress. All you need is a doctor's note and evidence of how much you earn to submit a claim.
• Premiums are tax-deductible. Another added perk – come tax time, you can get some cash back; income protection premiums are tax-deductible.

Finder survey: What is the main reason Australians take out income protection insurance?

What are some exclusions that may impact me?

All policies have general exclusions – for example, insurers do not cover any injuries, disabilities or illnesses that are self-inflicted or the result of an attempted suicide. However, if you're in your 50s, here are some of the important ones that may specifically affect you.

Pre-existing medical conditions

Some insurers place limitations or exclusions on claims related to pre-existing medical conditions. This can include chronic conditions like diabetes, arthritis and chronic fatigue syndrome as well as serious illnesses like heart attacks and strokes. It means you'll still be covered for other illnesses and accidents, but not claims related to your pre-existing condition.

If you have a pre-existing condition, make sure you read the product disclosure statement before buying and ask the insurer if you're covered for that specific condition.

Unemployment exclusions

While some insurers can cover you for involuntary redundancy – you'll have to pay a little extra if you want this – you're generally not covered for issues related to unemployment. This can include occupation-related unemployment, unemployed periods for seasonal occupations, voluntary unemployment and the end of fixed-term contracts.

Voluntary elective surgery or treatment

Some insurers do not cover you for claims related to elective surgeries and treatments. In other cases, you won't be covered for elective surgery within the first 1 or 2 years of taking out a policy. This is largely because it's not considered a medical emergency and you can schedule it in advance, so it's no longer something that can be considered unforeseeable and therefore insurable. If it is a medical emergency though, or it becomes a medical emergency, you should be covered.

How does income protection work for pre-existing conditions?

You'll usually find that insurers cover pre-existing conditions in one of the following ways:

• They'll cover you for the pre-existing condition, but you'll pay higher premiums because you're more likely to claim.
• They won't cover you for claims related to the pre-existing condition, but they'll cover you for unrelated illnesses and accidents.
• They'll refuse to cover you because of your pre-existing condition.

Each insurer will do things a little differently, so if you do get rejected by one, it doesn't mean you're out of options. In most cases, these are the simple steps you'll need to take:

• Apply for cover and make sure you disclose details about your pre-existing conditions.
• Accept either a larger premium or an exclusion on your policy.
• Look for another policy. If you're not happy with what you're being offered, you might want to try another income protection provider.

How much does income protection cost for over 50s?

Unfortunately there's no one-size-fits-all when it comes to income protection insurance prices for over 50s. That's because there are dozens of different factors that can affect price, not just your age. These include:

• Your gender: Women are generally more susceptible to pre-existing medical conditions so are likely to pay more for income protection.
• Whether you smoke: If you're a smoker, it's likely that you'll pay as much as 50% more for income protection insurance.
• Pre-existing medical conditions: As previously stated, pre-existing medical conditions mean you're likely to pay more for insurance. How much more you'll pay depends on the seriousness of the condition.
• Your job: If you work in a high risk job, like building or as a tradie, you'll most likely pay a little more than white collar office jobs because of the perceived level of risk.
• The waiting period: If you choose a shorter waiting period (how long you need to wait before you begin receiving money from a claim), you'll likely pay more for your premiums. Common waiting periods are 30, 60 and 90 days.
• The benefit period: The longer you want your benefit period (the length of time you can receive payments for) to last – for example 2 years, 5 years or up to the age of 65 – the higher the premiums will be.
• Lifestyle factors: If you're into any potentially dangerous hobbies like hang-gliding or rock climbing, you're also likely to see an increase in your premiums.

Compare income protection options for 50 year olds

Bottom line

You're definitely a little smarter, wiser and more wary of life and its potential hazards and hiccups in your 50s. With years of hard work already behind you, it'd be a shame to suffer a setback now. For peace of mind and financial security, you can begin comparing income protection policies here.

Frequently asked questions

• What's the maximum age I can take out an income insurance policy?

  In most cases, it's 59 or 60. It's much harder to find an insurer willing to cover you after this time. However, you can still be covered until you are 65 or, in some cases, as old as 70; but you'll need to take out a policy before you turn 60.

• Do I need income protection if I'm in my 50s?

  If you still rely on your income to pay the bills, then it could be something you need. If you could get by fine without it – maybe you have other sources of income – then it's not really as necessary and you might want to consider other forms of life insurance, like death cover, total and permanent disability or trauma cover. These can all pay you and your family a large lump sum if you become critically ill or die.

• Can I get income protection after I turn 60?

  It's possible, yes. However it is much harder to find insurers who'll offer cover after 60. Finder looked at 10 income protection policies and only 1 provider offered a maximum entry age exceeding 60. This was Aspect, which sets a maximum entry age of 65.

• What happens if I can't get an income protection policy due to pre-existing conditions?

  You have a couple of other options. You may be able to get:

  • Income protection through super. This doesn't generally require medical checks. It probably won't pay you as much, but it's still something. When you opt for your employer's superannuation fund, you're generally automatically covered for life cover, TPD or salary continuance cover.
  • Go through a direct provider. Direct life insurance providers in Australia, like NobleOak and Zurich, offer income protection policies with minimal medical underwriting. This lets you buy a policy direct from the provider without needing to go through a broker.
  • Look at a specialised income insurance provider. Some insurers specialise in insuring high-risk applicants.