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Over 50s Life Insurance

Many people seek life insurance to protect their mortgage payments and dependents, in the event of their deaths.

But what if you have paid off your mortgage and have no dependents? Do you still need life insurance?

The article will discuss life insurance for the over 50’s and what older people should consider when looking for financial protection later-on in life.

For more on the many different life insurance types, you may want to look at our Guide and FAQs articles.

What is Over 50s Life Insurance?

This is a type of specialised life insurance product designed for those over the age of 50. Insurers created them to offer financial protection for those who may not have a mortgage, or children that rely on their income anymore, but would still like a way to protect their other possible debts from impacting their partner, should they die during the length of the policy.

Quite often over 50s insurance products are used to cover the policyholder’s own funeral costs and to leave a certain amount of money to their loved ones.

They work like conventional Whole-of-Life Insurance policies, where you choose the amount of cover and pay monthly premiums up until your death. The calculation of your premiums will be made based on how much cover you need and how much you can afford to pay, as well as your age, occupation and health.

Do I Need Over 50s Life Insurance?

• As life insurance, as a rule, gets more expensive with age, over 50s plans are designed to be more affordable for older people.  These products largely cater for those aged 50 -80 years old.
• Many over 50s plans offer guaranteed acceptance and no medical examination required. This means that if you are of age, and you already may have a medical condition, this may be an easy and affordable way to get life cover.
• If you are looking for a way to pay for your own funeral expenses, an over 50s plan may be an affordable way for you to do this.
• Similarly, if you are looking to leave some funds for your loved ones when you die, these policies give you the opportunity to do so. 

Let’s Look at an Over 50s Life Insurance Example:

Gary is 59 and took out an over 50s life insurance plan two years ago. He pays £30 a month to cover his premiums. Recently, Gary suffered a heart attack and was sick for a very long time. As he had savings, he was able to cover his insurance premiums, as they were still affordable for him. He had also reached the two-year initial period for paying in premiums, his family will also stand to inherit the full lump sum at the end of Gary’s policy. Further, because he is on an over 50s plan with guaranteed acceptance, his insurance premiums will not increase as an off-shoot of his ill health. It seems Gary made the decision to take out over 50s insurance at exactly the right time. 

What are the Benefits of Over 50s Life Insurance?

• Cheapest for Older People – A specialist over 50s life insurance policy, in many cases, can be cheaper in premiums than seeking a conventional life insurance policy, if you are an older customer. Insurers have mitigated for the increased risk of death within the policy and its price point.
• Sum Assured – With many over 50s plans, the length of the term will be up until the day you die. This means that your premiums, under most over 50s plans, also remain fixed for the life of the policy.
• No Medical, Often Guaranteed Acceptance – With specialised over 50s life insurance, many providers offer this cover with the promise of no medical examination required for new applicants and in many cases, guaranteed acceptance of all would-be customers. However, in some cases, your premiums may be higher if you are, for example, a smoker. This could be beneficial for those who may have already ailing health.
• Funeral Expenses – If you have no dependents or outstanding debts, over 50s plan can still be useful for paying for your own funeral expenses. As the payouts from these policies are relatively small, this protection, in many cases, can be enough to at least take the stress off your loved ones, when it comes to organising your funeral.
• Stop Premiums – Depending on the provider you opt for, some insurers of over 50s will allow you to stop paying your premiums after a certain cut-off point. This could be 90 years old, in some cases. This means that the very elderly can stop paying premiums whilst maintaining the payout for their will beneficiaries. You will need to check this with your provider first, as ceasing your own policy payments will, in most cases, result in any claims for payouts being unsuccessful.
• Inflation Protection – With some providers, you can apply for over 50s cover that keeps up with rising inflation. This means that the value of your lump sum payment can be, at least to a certain extent, protected. Please check if this is a feature of the plan you take, as it is not available with all insurance providers. And please note, your premiums may increase.

What are the Pitfalls of Over 50s Life Insurance?

• Waiting Periods – With some over 50s insurers, the policy holder may need to pay into their policy for example, for two years, before the full life insurance sum assured will be paid out. In many cases, if the policy holder dies in the initial set-up period, their family may only receive what the policy holder paid in. Plus, a percentage over, as the sum of funds. These restrictions vary from provider to provider. For example, if you died in an accident during this initial period, some insurers would offer your beneficiaries the full sum assured.
• Is Cheaper Better? – If you have dependents, a spouse and/or large debts that need protecting in the event of your death, not all life insurance products for over 50s will be right for you. Commonly with these products, the expected payouts can range from £500- £25,000. You may require more comprehensive cover instead.
• Pay in More than You Get Out – If you live and pay into an over 50s plan for many years, it is possible that you can pay in more money than what is released, at the end of the policy.
• Not Suitable for the Very Elderly – Some insurers will not accept candidates who are over the age of 80. This is because they pose a higher risk to insurers very early on in the policy.
• Premium Payments Required – These products, like all life insurance policies, only pay out if you keep up with your premium payments. If you are looking at over 50s insurance you must be committed to the premium payments, if your family are to see any benefit at the end. If you, for whatever reason, stop paying premiums your cover you have paid in may be lost.

What are the Alternatives to Over 50s Life Insurance?

Savings and Investments – If you are looking for a way to give your loved ones a parting gift only, you may be able to save or invest using conventional methods. There may be less risk to the money you’re leaving behind, if you opt for this method, as you will not have to keep up with premium payments in order for your family/friends to benefit.

To find out more about over 50s life insurance, get in touch with a specialist insurance broker. They can offer you a free, no-obligation quote.