Insurance for over 50s

Case study: Mature lives with short funded superannuation

Roy is a married man aged 50. He has been self- employed for most of his life, but recently sold his business interests to a competitor and is now employed by them. His main financial concerns are for his financial security in retirement.

Roy has accumulated $70,000 in superannuation and owns his home. He has topped up his superannuation with $80,000 from the sale of his business. Roy anticipates that at age 65 he will require a retirement income of $50,000 per year (in today's dollars) and would like to ensure that this income could continue through to age 95.

The sum of Roy's current retirement benefits, without further contributions, totals $430,000 (in today's dollars) at age 65. To satisfy his retirement needs, it is estimated that Roy will need to contribute a further $36,000 per annum through salary sacrifice and superannuation guarantee arrangements with his employer.

Roy appreciates that the success of his retirement plan is extremely dependent on his health and ability to derive income. He has income protection of $4,000 per month with a benefit period to age 65 that should cater for his pre-retirement income needs, but this is not sufficient to satisfy his retirement savings shortfall.

To provide the financial security necessary to realise Roy’s financial plan, trauma insurance is added to his current insurance portfolio. Roy’s benefit requirements are calculated as follows:

• additional lump sum required to meet his retirement savings shortfall is $340,000
• costs for out-of-pocket medical expenses should a medical trauma occur is estimated at $50,000

The total required of benefits is therefore $390,000.

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