A recent topic that has circled the Seely homestead in recent weeks is life insurance, as our annual premium payments were due and whether the policies we purchased 18 years ago for specific purposes are still relevant any more.

We purchased these policies for a specific reason, and that was primarily that if one of us died, the funds would help the other spouse buy a house free and clear and have some residual funds to keep the surviving spouse financially propped up for a period of time, to make some decisions about their future without the financial pressure of income loss.

That made sense 18 years ago, when I was in my early 30s and we were growing our careers. But as our careers have grown now, and we have made some good decisions in money management, should either of us die, the loss would impact the personal side more than the financial side.

What is interesting is that I have chatted to a couple of friends who are in a similar situation, wondering whether in your 50s it still makes sense to keep their individual life insurance going. It is like you have had it for so long do you just keep it going because it still provides that safety net, or do you cancel the policy and just stick with your group life policy at work?

So the question has to be asked: what is the benefit of continuing your individual life insurance policy in your 50s, as opposed to cancelling it and just sticking with your group coverage?

Let’s face it, reaching your 50s often brings a natural urge to tidy up your finances, which is certainly happening in our house. Premiums on individual life insurance policies can look steep compared with heavily subsidised group life cover offered through an employer, and it is tempting to cancel the personal policy and rely solely on the workplace policy.

On the surface, this seems like a sensible way to save several hundred dollars a year. In practice, however, giving up an individual policy in favour of group cover alone can leave a significant gap in protection at exactly the point in life when it matters most.

The first issue is portability. Group life insurance is tied to your employment. If you change jobs, are made redundant, or decide to retire early, that cover typically disappears the moment you leave the company. An individual policy, by contrast, belongs to you. It stays in force regardless of your employment status, which matters enormously in your 50s, a decade when career changes, redundancies, and early retirements become far more common than in your 30s or 40s.

The second consideration is insurability. Life insurers price individual policies based on your health and age at the time of application. Once you are in your 50s, health issues such as raised blood pressure, cholesterol concerns, or a family history of illness become more likely to surface.

If you cancel your individual policy now and later need to replace it perhaps because you have left your job or your group cover has been reduced you will be applying as an older person with a higher risk of health complications.

Premiums could rise dramatically, or in some cases you may be declined cover altogether. Keeping the policy you already qualified for locks in rates based on your health history at an earlier, likely healthier, stage of life.

There is also the question of coverage adequacy. Group life policies are usually structured as a multiple of salary, commonly two to four times your annual income.

For someone earning $80,000 a year, that might mean $240,000 to $320,000 of cover. This can sound reasonable until you consider that in your 50s you may still be carrying part of a mortgage, supporting children through university, or contributing to ageing parents’ care.

An individual policy is typically chosen to match your specific financial obligations, and cancelling it in favour of a flat multiple of salary can leave your family underinsured at a critical time.

Thirdly, group insurance only works for the employed. Often in your 50s, if you have a spouse and are doing well financially, there might be a time when one of the working spouses decides to retire early. That means group coverage is done, and the retired spouse now has no life insurance at all should they have cancelled their individual policy.

Finally, there is the simple matter of control. With an individual policy, you choose the sum assured, the term, and the beneficiaries, and you can adjust these as your circumstances change.

Group cover offers none of that flexibility; it is a one-size-fits-all benefit set by your employer, subject to change or removal whenever the company decides to alter its benefits package.

None of this means group life insurance is without value. Used alongside an individual policy, it provides a useful layer of additional, low-cost protection and coverage. The danger lies in treating it as a replacement rather than a supplement.

In your 50s, with fewer working years ahead in which to secure affordable new cover, maintaining the individual policy you already hold is generally the more prudent choice.

At the end of the day, it will always be a personal decision and from my perspective, I still see value in keeping our individual policies. Although you may be on the road to financial independence, life insurance offers something my husband rightly pointed out: it gives the surviving spouse the ability to choose their future, rather than being potentially constrained by financial pressure.

• Carla Seely is the chief operating officer at Freisenbruch Insurance Services Ltd and has 26 years of experience in international financial services, wealth management, and insurance. During her career, she has obtained several investment licences through the Canadian Securities Institute. She holds the ACSI qualification through the Chartered Institute for Securities and Investments (UK), the Qualified Associate Financial Planner (QAFP) designation through FP Canada, and the Associate in Insurance (AINS) designation through The Institutes. She also completed a Master's Degree in Business and Management through the University of Essex.

• For further inquiries or suggested topics, e-mail: justaskcarla@outlook.com