Buying Life Insurance as We Live Longer
By Dr. Napat Jatusripitak
In the past 30 years, the average life expectancy at birth of Thais increased by a whopping 10 years. It currently stands at 75. The technological and medical advancements all point to the future that we all will live much longer.
This is all good news, but living longer can also be a challenge. How on earth are we going to fund our longer retirement?
If things worked out well for you, you and your dependents likely won't need life insurance when you approach retirement. But for many of us who feel like we might not be able to save enough, the mathematics of life insurance is affected by the following three factors.
#1. Your Dependents Might Outlive You (by a lot): it's a wonderful thing that you and your family get to live longer. But if you're the sole income earner and something were to happen to you, living without adequate income for a much longer time probably isn't what you want for them. Your partner might need to find a job or multiple jobs to support the family. It can be a difficult process if he or she hasn't worked for a long time. Reaching retirement age doesn't help either.
#2: Living Longer Means Being a Dependent Longer: surveys from the US find that in the past five years, two out of three Americans aged fifty or above gave financial support to their dependents aged over twenty-one. What this means is that there's a new demographic called the “Blooming Adults” who are in between their teen years and adulthood. They’re learning to become independent individuals but stay in school longer and still need financial support from their parents.
#3: Opportunities to Save on Insurance Premium: buying life insurance gets more expensive as your age due to the obvious increased health risks. Therefore, if you think you'll live for a long time, you can save on the premium payment by buying a longer term policy. So instead of buying a 10-year policy, you might opt for a 30-year policy now which usually is cheaper than buying the 10-year policy three times.
While how much these three factors come into play depends on your family status, your future income and expenses, and your health, it is not too early to think about them before you purchase life insurance.
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