Plans for Working in Retirement and Insurance Needs

RBC just released a new poll today that shows a lot of people expect to be working later in life, in their what-used-to-be-called retirement years. For many that will be a requirement, as working bridges the retirement savings gap we hear so much about these days. I've been investigating possible needs for insurance during retirement and have discovered that the traditional way to cover the risk of a health problem like a heart attack or a bout of cancer interrupting work and cash inflow - dis-ability insurance - typically stops at 65 age. The risk of health incidents rises with age, especially after 65, and is much higher than the chances of actually dying in any given year till quite an advanced age. As the press release says, if you are alive at 65, a man can expect to live to 83 and a woman to 86. Yet, about one in two people aged 65 can apparently expect to have and survive a serious or critical illness by age 75.

There's another type of insurance, not so well known, called critical illness insurance, which covers all the most frequent health problems (cancer, heart, stroke, dementia, MS, Parkinson's etc) but it's hard to initiate after 65 and premiums are said to rise steeply. In addition, blogger Peter Benedek at Retirement Action took a detailed look at Critical Illness insurance and wasn't impressed with what he found in terms of it being a fair deal for the consumer.

The poll shows people don't think of retirement as a set point at age 65 anymore. Maybe the insurance industry needs to consider how it can adapt its products to longer life expectancy and new types of later life circumstances just like the average person must.