You may find it harder to get life insurance as you get older, but there are still policies available that could give you peace of mind. Here are your options if you are over 50.
Financial experts are forever espousing the benefits of setting up some form of life insurance while you’re still young. But that doesn’t mean there aren’t any suitable options if you’ve reached a certain age and want to provide for your family after you’ve passed away.
Over 50s life insurance is an option for anyone aged between 50 and, typically, 80 or 85. Unlike other life insurance options, it’s available to anyone, regardless of medical history, and pays out a lump sum of money to your beneficiary when you die.
You can choose how much you pay when you get a quote from an insurer. They then offer you a fixed payout based on this.
Most insurers set a limit on the premiums you can select. For example, you could pay anything from £5 to £100 per month.
Your age also has a big impact on the payout you get offered. The older you are, the less time you’ll typically be making payments, and so the lower the payout will be.
Most over 50s life insurance policies make you pay monthly premiums until you die, regardless of your age. 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.
In any case, if you stop paying your monthly premiums, your policy will end, and you will lose everything you have paid in.
Most insurers have policy exclusions meaning you’ll not get a payout if you die under certain conditions, for example:
Within one year of taking out a policy, in this case, your beneficiary would receive back what you paid in
Dying as a result of alcohol or drug abuse
However, there can be exceptions to these terms which mean you get the full payout if, for example, you die within the first year due to a non-drug or drink-related accident.
This will depend on your personal circumstances, but here are some pros and cons to think about before you apply:
Guaranteed acceptance, even with a bad medical history or prognosis
You know exactly what payout you will get from the start
Over the short term, the payout is likely to be a lot more than you pay into the policy
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 may lose value over time
Over the long term, you could pay in more than you get as a payout
If you stop paying your premiums you forfeit any money you’ve invested in the policy
Given you will probably be paying premiums through into your retirement, it is a potentially risky policy to hold, especially if you would be living on the State Pension alone
Fortunately, there are plenty of alternatives to over 50s life policies. If you are over 50, one of the following alternatives may prove more suitable:
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 used to pay for your funeral when you die. Here is help choosing the right savings account.