Australian Life Insurance Issues

A lot of people are asking me about life insurance as it relates to cryonics lately, so I have decided to summarize the key issues here.  I have also received some queries regarding life insurance locked in superannuation and I believe that what I am saying below still applies, but I have not double checked it.

A few things I want to say.  Firstly,  I am not giving life insurance advice.  I am just sharing what I have learnt, particularly as it applies to cryonics.  Secondly, when I show dollars below they are very approximate from my findings and forecasting.  They are not meant to be quotes.  The final quotes would come from insurance companies and qualified insurance agents.  And thirdly, there are exceptions to what I say below, but they are usually costly.  I am trying to provide general information for simplicity.

Okay the simple reply is that life insurance in Australia is complex and is not very cryonics friendly.

The reasons:

The biggest is the type of life insurance offered in Australia.

I will have to do this by example with numbers to show you.

Suppose you are now about 30 years old.   The cost of a suspension with SSA will be very approximately $80,000.  Let’s say that you need the suspension when you are about 85 years old.   The cost for a suspension at that time, with inflation, will be about $400,000.

So you say okay, I’ll insure for the whole $400,000 now.  You may actually do it by staged topping up later, but for what I am going to show you it does not matter so let’s say the whole $400,000.

There are 2 ways to insure .

  1. Annual Stepped where the cost of the life insurance increases each year as you get older.  In our example the premium cost will be about $300 a year when 30 years old and then about $6,000 a year when you are 65.  It goes up quite quickly when you are older.
  2. The other way is Annual Level.  You pay about $500 premium a year from age 30 to age 65.  The amount is fixed through this time period.

Great! you say.  I will just get annual level. 

Here is the problem in Australia.  You cannot get annual level passed age 65.  From about age 65 it switches to annual stepped whether you started annual stepped or annual level.

Okay, you say, so it is annual stepped passed 65 years old.  I am still insured isn’t that right?.

But you hit the next problem.  At this advanced age the premium costs go up very quickly.     Past 70, life insurance of any type is difficult in Australia.  If you can get it, at age 70 you are paying about $13,500 a year.  At age 80 nearly $45,000 a year.  At age 85, nearly $80,000 a year.  In better words you cannot afford to continue your life insurance when you need it the most even if you can get it.

In the USA you can get annual level life insurance up to about 120 years old, which is more than adequate.   The premiums at an advanced age are much more affordable because it is annual level continued from when you started life insurance; closer to about a fixed $4,000 a year even when you are 90 years old and took the policy out when 45 years old.

A good way is to start being insured with Australian life insurance and then at the appropriate time switch to the US life insurance.  Getting US life insurance is not so easy for an Australian, but you can do it especially if the plan is to do it in the next 15 years or so.
As if that was not enough there are a few other problems with Australian life insurance.
  1. Not all companies will handle cryonics.
  2. Usually a policy needs to name the cryonics company as a beneficiary.  Not all companies will do that.
  3. Sometimes you need a split beneficiary.  Again not all companies like to do that.
  4. Sometimes the cryonics company may insist that they own the policy.  That is what Alcor requires.  Again very few companies in Australia will do that.

As I said, it is complex, but CSA can help you through all this.  Even if you cannot get US life insurance there may be other ways to finance your suspension at an advanced age.

Best wishes,

Peter T

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