What is it?

It is an insurance policy that is only available if you are over 50 years old, and pays out a lump sum of money to someone of your choosing when you die.

This type of life insurance guarantees acceptance even if you have had a troubled medical history.

How much does it cost?

You can choose how much you pay when you get a quote from an insurer, then they offer you a fixed payout based on this.

Most insurers set a limit on the premiums you can choose from, for example, a minimum of 5 and a maximum of 100 per month.

Your age also has a big impact on the payout you get offered. The older you are, the less the payout will be.

How long do policies last?

Most over 50s life insurance policies make you pay your premiums until you die, regardless of your age.

If you stop paying your monthly premiums, your policy will end and you will lose everything you have paid in.

However, you can find policies that stop taking premiums when you reach a certain age, such as 90, or when you have paid for a set duration, such as 30 years.

Are there any exclusions?

Most insurers have policy exclusions that mean you will not get a payout if you die under certain conditions, for example:

  • Within one year of taking out a policy

  • Committing suicide

  • Dying as a result of alcohol or drug abuse

However, there can be exceptions to these terms which mean you get the full payout, for example, you die within the first year due to an accident.

Should you get it?

This will depend on your personal circumstances, but here are some pros and cons to think about before you apply:

Pros

  • Guaranteed acceptance, even with a bad medical history

  • You know exactly what payout you will get from the start

  • Over the short term, the payout is a lot more than you pay into the policy

Cons

  • Even if you are healthy and fit, you get the same payout as someone who is not

  • Most policies do not rise with inflation, so your payout erodes in value over time

  • Over the long term, you could pay in more than you get as a payout

What are the alternatives?

  • Term life insurance: If you are healthy and can get accepted, this type of policy could offer you a higher payout without the risk that you pay more in premiums than you get back. The main downside is if you die outside of the term, then you get no payout.

  • Whole of life insurance: This type of life insurance pays out whenever you die, without any term restrictions. However, you have to get accepted which can become more difficult as you get older due to your health and shorter life expectancy.

  • Funeral plan: This lets you pay for your funeral before you die, either by monthly instalments or as a lump sum. The risk is the company you pay may go out of business by the time you die, and you will have lost that money.

  • Savings account: You could put your money into a savings account each month, or have a lump sum put aside that you plan to give to your family or use to pay for your funeral when you die. Here is help choosing the right savings account.