When you are over 50, you need peace of mind. This means being able to guarantee the people you love financial support even when you are not around. What better way can you do this than getting life insurance? But, what is life insurance over 50? What does it entail, and how does it work? Read on as FamilyMoney explains…
What Is Over 50s Life Insurance?
Over 50 life insurance is a type of life insurance cover you take between ages 50 and 80. It will pay out to your beneficiaries when you pass away and can be used for financial commitments such as funeral costs and hospital bills.
Additionally, you can place your life insurance over 50 policies in a trust. A trust enables you to state who your beneficiary will be in the event of your death. You will be insured for the rest of your life as long as you make your fixed payments.
What Is the Difference Between Life Insurance and Over 50s Life Insurance?
While life insurance and over 50s life insurance may sound similar, there are two main differences between them:
- No medical information or checkups are needed – unlike the standard life insurance, you are guaranteed acceptance for over 50s life insurance regardless of any underlying medical conditions you have. You also won’t be asked any medical questions.
- It lasts a lifetime – standard life insurance premiums cover you for a set term, while life insurance for over 50s covers you for the rest of your life, as long as you make your fixed payments.
Is Acceptance for Over 50s Life Insurance Guaranteed?
One massive difference between over 50s life insurance and other life insurance premiums is that you are guaranteed acceptance by any life insurance provider. You don’t need any medical checkups or answer any health-related questions for guaranteed acceptance.
You only need to fill out your personal details, how much you would like the policy to payout. This means, regardless of your health, you will find a cover that provides a lump sum to your loved ones when you are no longer around.
Who Needs Over 50s Life Insurance Plans?
Whether you need over 50 life insurance depends on your situation, finances and lifestyle. Life insurance for the over 50s can relieve the financial burden for your family when you pass away, giving them peace of mind without extra worry.
You might need over 50 life insurance:
- If you have dependents relying on you financially.
- You have to settle unpaid bills or a mortgage that needs financing when you pass away.
- If you need cover for medical bills and funeral costs.
- You want to leave a gift to your dependents.
Life insurance for over 50s wouldn’t be a good fit for you if:
- You are on low-income assistance.
- You are single and have no dependents.
- Your partner earns enough money to cater for your family if you pass away.
How Does Over 50s Life Insurance Work?
Life insurance for over 50s is a great way to leave your loved ones with a cash payout when you die. It can be used to pay for any outstanding medical bills, funeral costs or as a gift.
If you are a UK resident aged between 50 and 80, you can immediately get life insurance. You only need to choose how much you are comfortable paying every month, from £7 to £100, and your beneficiaries will receive a cash sum amount when you pass away—the higher your fixed payments are, the larger the cash lump sum payout.
If you pass on, your named beneficiary will claim the full lump sum paid out by your policy. Once all the supporting information and conditions are met, the insurance provider pays the payout after approving the claim.
If you pass away between 1-2 years after purchasing your over 50s life insurance, some providers will only return your premiums. Therefore, before buying any policy, understand the wait time as it varies between insurance providers.
How Much Is Life Insurance for Over 50s?
Monthly payments for over 50 life insurance plans are usually lower than standard level-term life insurance policies with fixed cash sum payouts. However, the cost of your over 50s life insurance for UK residents will depend on a your personal circumstances:
- Age – as you get older, so does the risk of developing health conditions. Therefore, the older you are when applying, the higher the insurance premium. Age is also a factor that affects the premium on your over 60s health insurance and your over 50s travel insurance.
- Cover – how much payout you want to leave behind will significantly impact the amount you pay. The larger the cash sum payout, the higher your monthly premiums. Pick a comfortable monthly fee you can commit to.
- Provider – different insurance providers charge different premiums. Some providers are more expensive than others, with varying benefits, features, and qualifying periods.
- Lifestyle – if you are a smoker or have used tobacco products in the last 12 months, this will affect the cost of your cover. Smoking increases the risk of developing health complications.
How Much Cover Do You Need?
Choosing how much cover you need depends on several factors, including any loans, mortgages, dependents, the purpose of the payout, and the amount you are comfortable paying for your fixed monthly payments.
If you want the cash lump sum to cover death and funeral expenses, allow for inflation when choosing a payout amount. The total cost of a funeral by today’s prices might not be enough in 10 years. The average cost of a funeral in the UK is £5,033. Consider adding an extra £5 to your monthly premiums to account for the average cost of inflation.
Can You Get Over 50s Life Insurance If You Are Terminally Ill?
One huge attraction of over 50s life insurance is that you don’t need to provide any health information or pass any medical tests to be accepted. Therefore you can take out a policy despite suffering a terminal illness.
However, the insurance provider might not payout if you die soon after your policy starts. Most policies have a wait period of between one to two years which must pass before the insurer pays out. Ensure you check the wait period on the policy before you consider purchasing.
What Happens if You Miss a Payment on Your Over 50s Life Insurance Policy?
If you miss a payment, your insurance provider might offer you a grace period, usually around six months, to pay the missed payments before your policy lapses. Once you do make the payments, your policy will continue. If you stop paying premiums, your policy will be cancelled.
Failure to pay the premiums will result in your insurer cancelling your policy. You will lose all the money you have paid in your previous payments, and you will receive no payout. Therefore, it’s important not to miss any monthly payments. You can also check the specifics of your over 50s life insurance cover to avoid getting caught unexpectedly.
What Happens If You Die Soon After Taking Out Cover?
Most life insurance policies for over 50 have a waiting period of between one to two years when you buy the policy. If you pass on during the wait period, the policy lump sum won’t be paid out, but your insurer will refund your premiums.
Some policies will payout if you suffer an accidental death. After the waiting period lapses, the full pay out will be paid out upon your death, provided you make all your monthly payments.
Can You Get Cheaper Over 50 Life Insurance Plan?
While over 50s life insurance is expensive, there are several ways UK residents can get cheaper insurance. However, cheaper life insurance isn’t always the best option. Different ways to get cheaper insurance include:
- Comparing several providers – different over 50s insurance providers have varying features, benefits and costs. By comparing several life insurance quotes, you can get cheaper policies. However, ensure you carefully check each provider’s policy features to avoid missing out on essential details.
- Reducing cover level – the more significant the payout amount, the higher the premiums. Reducing the pay out amount will significantly reduce your monthly payments, which will make your insurance premium cheaper.
Does Over 50 Life Insurance Have a Funeral Benefit Option?
You can add a funeral benefits option to your premium if you expect to use your payout from your over 50s life insurance plan to cover funeral costs. The funeral benefit option allows your funeral costs to be paid directly to an agreed funeral home to aid in funeral planning rather than solely to your beneficiary.
The Prudential Regulation Authority does not regulate the funeral benefit option. When you pass on, the funeral home will help your family with all the funeral arrangements. Keep in mind, while the pay out can be used to cover funeral costs, your insurer may have specific funeral benefit option plans and limitations. Ensure you check and understand the basics to avoid any surprises.
What Are the Benefits of Over 50s Life Insurance?
There are several benefits for taking out life insurance over 50:
- Acceptance is guaranteed – since you don’t need to answer any medical checkups or tests to be covered. Most insurance providers will accept you regardless of your financial status or medical history.
- You can write the policy in trust – with the help of a financial advisor to help you avoid the 40% inheritance tax on your beneficiaries.
- Free cover – after reaching a certain age, your insurer might waive your fixed premiums, and you will stop paying your premiums if you live past a certain age. You will still be covered, but you will stop paying premiums every month.
What Are the Disadvantages of Over 50s Life Cover?
While over 50 life cover is an effective financial strategy, it comes with some drawbacks:
- Lacks cash-in value – over 50 life insurance policy has no cash value. If you fail to keep making monthly payments, you will lose your premiums, and the insurer will not pay any cash lump sum.
- Waiting period – most insurers will require you to pay your life insurance plan for one or two years before you qualify for a full payout. If you die during the waiting period, you will only get your premiums back.
- Affected by inflation – how does inflation affect your policy? Over time, as inflation rises, your payout can lose value. For instance, if you buy a £10,000 cover when you’re 50, in 30 years, it won’t be as beneficial.
- Paying more than you will get – if you purchase the policy early in life and live a long time, you may end up paying more money than you will receive.
Frequently Asked Questions
If you lack a steady income and dependents depend on you financially, life insurance is a great option to relieve financial burdens after you pass away.