Few people would expect their children to pay for those
long awaited holidays planned for in retirement. Yet a worrying
number of us will be forced to ask our children to foot the
bill for unaffordable health insurance premiums or exorbitant
hospital fees. By planning ahead early on, you can avoid having
to give up health insurance when you need it most or asking
family to subsidize it.
Life can be unpredictable at the best of times. There are
two events, however, that most of us can be absolutely certain
of: we will retire and, at some point, we will die. What happens
to us between those two events seems more difficult to predict
and therefore more challenging to prepare for.
Actually, there is more certainty in old age than at first
appears. Sure, most of us will retire later and live longer
than our parents. But being older for longer comes with known
risks: health risks. There is a good reason why health insurance
premiums increase, often dramatically, with old age: because
insurers know for certain that, as you get older, your health
will deteriorate and you will need them more.
What they know is this: the risk of getting heart disease,
cancer, respiratory disease such as chronic bronchitis, emphysema,
pneumonia, osteoporosis and diabetes dramatically increases
beyond the age of 65. They also know that you are much more
likely to require hospital admission for elective procedures
such as hip or knee replacements, or as a result of a fall.
This knowledge is not the secret preserve of insurers or
civil servants. The data is there for all to see. Yet, governments
and financial advisers who are already struggling to persuade
people to plan for retirement and death, find it even harder
to encourage them, particularly if they are young and healthy,
to prepare financially for the inevitable increase in the
cost of healthcare as they get older.
Ironically, the people who are the most comprehensively insured
for healthcare are those who need it least: the young and
healthy. This is largely because they are employed and many
employers include health insurance as part of employee remuneration.
By the time retirement day comes however, the premiums have
risen and continuing the policy without the salary suddenly
seems prohibitively expensive. No wonder then that many fledgling
retirees find themselves uninsured precisely when they become
There is of course the option to take up a health insurance
policy later on in life and there are many reputable and specialist
insurance companies who offer policies specifically for older
people. However, there is a penalty for joining later: most
of these policies will require a full medical history and
immediately exclude all pre-existing conditions.
So one of the benefits of taking out a policy early on in
life, when you are still fit and healthy, is that many of
the health problems likely to affect you in later life will
be covered. Even though the insurance premiums will still
rise, the policies will be better value because you will be
Whether or not you have been sensible enough to take out
health insurance in your forties, there is still the problem
of paying for it in your sixties or later. For many people,
there is a real risk that their retirement income or pension
pot just won't be big enough to continue the policy. So what
is the solution?
The good news is that there is an alternative to funding
healthcare in retirement out of your pension or retirement
income. Once again, it involves planning ahead. Basic in-patient
healthcare insurance for an individual aged between 65 and
80 can be expected to cost around USD$160,000 or GBP£120,000.
So, fifteen or twenty years prior to your retirement, you
could set up a regular savings plan with a guaranteed maturity
amount to pay out on your sixty-fifth birthday which would
then cover those expensive health insurance premiums in retirement.
At current rates, putting aside as little as USD$650 a month
for only fifteen years would generate a guaranteed USD$160,000,
allowing you to preserve your health insurance when you are
most likely to need it.
Whatever your age or situation, seeking sound financial advice
as soon as possible is essential to avoid a predicament that
could be as distressing as it is inevitable. A financial adviser
will be able to talk you through the options available, whether
it's establishing a sensible savings plan or selecting a good
quality overseas medical insurer and the most suitable - and
affordable - policy for you and your family.