With all the focus on maximising your savings in preparation for your twilight years, it’s easy to forget about one of the biggest potential risks any pre-retiree can face – your own children.

Based on general statistics, it is highly likely that your children, who may be burdened by school fees and home loans, are significantly under-insured. The implication of this is that if the unthinkable did happen, it could be your retirement that is significantly impacted, especially if there are grandchildren involved.

Taking on a parental role again is probably the last thing you’d expect to cope with in your retirement, but like many caring parents, you wouldn’t think twice about helping your children (and grandchildren), but it’s easy to forget about the time, energy and financial commitment involved. Come what may, you would be there to support your family in any way you could, even if it meant putting your retirement plans in jeopardy.

To minimise this impact, it’s important to ascertain if your children have implemented a suitable protection strategy to ensure that they, or their children (your grandchildren) receive the financial support they need if something terrible should happen. The short of it is, you need to ensure that your retirement is adequately protected if tragedy strikes.

If your children are under-insured, you may consider assisting them in the payment of their required life insurance, remembering that the cost involved will be only a fraction of what you could otherwise stand to lose.

When a ‘non-dependent’ becomes ‘dependent’ it’s a labour of love and an expensive pastime. Not many people factor this into their retirement plans.

When deciding how much life insurance cover is required, consideration should be given to how much money is needed to:

  • Clear debts
  • Provide an ongoing income to meet living expenses and
  • Cover a range of medical, childcare and housekeeping costs

If you pay for the insurance, you may want to own the policy and ensure you have complete control over any proceeds that are paid.  Bear in mind however, that it may be more tax-effective if your adult children take out the required insurance through their super fund.

Choosing the right sort of insurance can be challenging and confusing. As a result, you should seek professional advice before making any decisions. Not all policies are made equal.

Our team at Perks are Life Risk Specialists® which means they are highly skilled and experienced in personal risk insurance.

If you have any enquiries or would like to learn more, please don’t hesitate to contact Peter Edmonds or Eddie Bell on 08 8273 9300 or pedmonds@perks.com.au | ebell@perks.com.au