Life over 70 – An ageing UK population

It’s a welcomed fact that people in the UK are now living longer than ever before. However, this means we also have to financially provision for a longer life.

Rising living costs and household bills, the increasing cost of funerals and inflation are all factors most of us need to consider.

Since 1970, the average life expectancy has risen by approximately 10 years, from 71 to 79.5 years for men and 83.1 years for women[1].

As a result, more and more people are investigating their over 70 life insurance options.

This includes both those new to life insurance and those who have previously had term-based cover which has expired.

Our Reassured experts have prepared the below guide to help you establish which is the most suitable life insurance option for you.

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Over 70 life insurance

It’s likely, even if you’re accepted, that term-based life insurance over 70 won’t be a cost-effective option. However other policy options are still available, including:

When in your 70s and taking out any form of life insurance, it’s important to remember that the cost of cover is likely to be relatively high for the following reasons:

  1. You’re more likely to have suffered a medical condition
  2. You’re at higher risk of developing a future medical condition
  3. The older you are, the shorter your life expectancy.

Term life insurance over 70

The most common form of cover is term-based life insurance. Premiums are paid each month and if you die within this set time period (term), a lump sum payment is issued.

Unfortunately, from the age of 70, this type of cover is unlikely to be cost-effective, (and that’s if you’re application is even accepted).

With term-based life insurance, the sum assured tends to be for a significant amount (to cover things like a mortgage) and premiums are calculated based on this amount and the level of risk you pose.

Term-based policies also tend to have a maximum age limit for which they’ll provide cover until, for example, 84 years.

Therefore, if you take out a policy at the age of 72, your policy could only last a maximum of 12 years.

But don’t worry that doesn’t mean obtaining cost-effective life cover isn’t possible.

The most common types of life insurance for over 70s are whole of life insurance and over 50 plans. There’s also the option of a funeral plan if this expense is the only cost you need to cover.

When looking to secure life insurance in later life, you need to consider what it is you’re looking to protect to determine the right cover to suit you.

Regardless of the purpose of your life cover, rest assured there is an option to meet your needs.

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Over 70 life insurance no medical, (over 50 plan)

Over 50 plans provide cover for a specified sum assured. Acceptance is guaranteed and no medical information is required for UK applicants aged 50-85.

The most well-known type of life insurance for those in later life is a guaranteed over 50s plan.

As with traditional life insurance, monthly premiums are paid and upon your passing, a pay out is made to your beneficiaries.

An over 50s plan lasts for the rest of your life, making it a form of life assurance. This means that a pay out is guaranteed when you die rather than if you die within a specific time period, (as with life insurance).

Although these plans guarantee acceptance if aged 50-85 and don’t require any medical information, the risk you pose to the insurer is still factored into the cost of your premiums.

Insurers will use information regarding your age and smoking status to help determine this.

Reaching the upper threshold, at the age of 70, it’s highly likely your premiums will be expensive, so it’s important to consider your budget and whether you can afford the ongoing payments.

With a number of over 50 plans, once you reach the age of 90, premiums cease but cover remains in place until you die.

Therefore, it’s important to consider the cost of your premiums and time until you reach 90, as it’s possible that you could pay more into the plan than the sum assured.

The waiting period, (sometimes known as the qualifying period)

Over 50 plans have a ‘waiting period’, which usually lasts 12 or 24 months. This means that if you pass away due to natural causes during this period, a pay out won’t be made, (although the premiums paid will be returned).

Death caused as a result of an accident is still eligible for a successful claim.

The pay out from an over 50s plan can be used for whatever your beneficiaries deem fit, from covering the cost of your funeral to providing an inheritance.

Monthly premiums can vary significantly between insurers, therefore when selecting an over 50s plan it’s essential you compare quotes.

An FCA registered life insurance broker, such as Reassured, can carry out the hard work on your behalf at no extra cost.

Key benefit: You’re guaranteed acceptance if aged between 50-85 and there are no health questions or medical exam.

Whole of life insurance for over 70s

Whole of life insurance could be a great option if in your 70s, especially if you’re in good health. A pay out is guaranteed and can be used to fund whatever your beneficiaries deem fit.

Generally speaking, whole of life insurance is best suited to those in later life who don’t have medical issues.

Unlike an over 50s plan, a whole of life application involves health-related questions and possibly a medical exam.

Providing details of your medical history or undergoing a medical (providing you have no health issues) could allow you to secure the same level of cover as an over 50s plan but for a lower premium.

“A regular whole of life insurance plan could give you at least 40% more cover than its heavily advertised relation, the guaranteed over 50 plan.”[2]

However, the cost of your monthly premiums is still calculated based on the level of risk you pose to the insurer.

On account of being over 70, this is likely to be deemed relatively high and therefore your monthly premiums could still be costly.

That said, dependant on your budget, this may be the most suitable option if your desire is to leave an inheritance, (something not facilitated by a funeral plan, see below).

Like an over 50s plan, whole of life is a type of life assurance meaning that when you die, your beneficiaries are assured a pay out.

Whilst the monthly cost of whole of life insurance may be less than it’s over 50s plan equivalent, unlike over 50s premiums which can stop at the age of 90, whole of life premiums continue until the day you die.

Again, this means that it’s possible to pay more into the policy than your loved ones will receive as a pay out.

This type of life insurance can be suitable for covering the cost of a funeral, clearing outstanding debts and/or providing an inheritance.

As with all other types of life insurance, monthly premiums can vary significantly from insurer to insurer. So, it’s best to compare quotes.

Key benefit: A pay out is guaranteed and you could secure a greater sum assured, with a lower premium, compared with an over 50s plan, (if in good health).

Missed premiums, (don’t lose your cover protection)

Regardless of the type of life insurance you choose, it’s important that you keep up to date with your premiums.

A missed payment could result in your policy becoming invalid and upon your death, your loved ones won’t receive a pay out.

Equally, if you end the policy, it’ll become invalid and no pay out will be issued. In this instance, you’ll lose all of the money you have invested into the policy.

+122% increase in funeral costs since 2004+122% increase in funeral costs


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Funeral plans for over 70s

Funeral plans are great for those looking to specifically cover the cost of their funeral and applicants of any age are accepted. However, in some instances, only the funeral director costs are covered.

Pre-paid funeral plans offer guaranteed acceptance and the cost of your selected plan will not differ depending on your age as it’s set by the current going rate of a funeral.

This means that regardless of the rising cost of funerals, currently +122% over the past 15 years[3], you’ll pay no more than today’s rate.

However, whilst age isn’t a factor with regards to cost, it may affect the length of time you have to pay into the plan.

Payment options

Generally speaking, there are three payment options:

Both the one-off payment and 12-monthly interest-free payment options are likely to be available for those aged 70 and over. However, an instalment plan may prove more difficult.

The length of an instalment plan can be anywhere between 2-30 years. When looking at arranging a funeral plan over the age of 70, it’s likely the term of the instalment plan will be kept minimal, that’s if an instalment plan can be offered at all.

With regards to 12-monthly interest-free payments, you’re likely to be accepted if you’re over 70, but if you die within the 12-month period, the remaining balance will need to be covered by your loved ones.

Why choose a funeral plan?

A funeral plan can not only avoid your loved ones from having to undertake the burden of arranging your funeral at an emotional time, but it also allows you the opportunity to state your wishes with regards the ceremony.

As mentioned above, a funeral plan can’t be used as inheritance, it’s purely to cover the cost of a funeral.

Therefore this option is not suitable for anyone looking to cover outstanding debts or leave an inheritance for their loved ones.

Furthermore, some funeral plans only cover the cost of the funeral director, not third-party fees such as venue hire and minister fees, (although a contribution may be made).

Pricing and the aspects included within a funeral plan (third-party contributions, coffin type, vehicles etc.) can differ, therefore when looking at taking out a plan, it’s a good idea to compare a wide variety of those available.

Reassured can help you compare the various aspects of the plans available within your budget to help you find a funeral plan offering all the elements you require.

Key benefit: You’re able to lock in the cost of a funeral at today’s rate, avoiding the spiralling costs. You can also get to determine your own ceremony.

Joint life insurance for over 70s

Joint life insurance policies are generally cheaper but don’t offer the same level of security for the surviving partner. 

Taking out a joint policy can reduce your premiums by approximately -25%, which is ideal if you’re on a tight budget.

All of the aforementioned policy types (over 50s plan, whole of life and funeral plans) offer a joint option, but before taking this, there are a couple of things to consider.

A joint policy will only pay out once – usually on the first death.

With regards to life insurance, the pay out will be made directly to the surviving partner, however, it’ll then leave them uncovered as the policy expires.

They’re then at risk of not having adequate protection or having to source new cover, which could prove difficult as older and potentially in a worse state of health.

For this reason, if it’s financially viable to take out two single policies, this would provide a much greater level of cover for both parties.

When applying for joint life insurance over 70, both parties must qualify for the type of cover you’re looking to secure.

For example, if your desired policy type is whole of life, both partners will need to have a health bill clean enough to be accepted.

Even if both of your medical circumstances are accepted, the ill-health of one partner could increase the premiums, leaving one partner paying over the odds.

Can you have a joint funeral plan with your partner?

Yes. It’s possible for over 70s to secure a joint funeral plan arrangement. However, we don’t currently offer this option at Reassured.

Certain funeral plan providers allow you to put two names on the plan. Therefore, it can be used for either partner, depending on who passes away first. Other providers will only allow one name onto the plan.

A joint funeral plan lessens the financial pressure placed on the first death. When the second partner dies, the estate could then fund the cost of the funeral.

Although, there could be pressure on your loved ones to pay for the service before your estate has been settled and distributed.

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Over 70 life insurance in trust

Regardless of your age when taking out life insurance, it could be very beneficial to have your policy written in trust.

Writing your policy in trust passes ownership of your life insurance over to someone you trust (a trustee), who’ll then be responsible for distributing the pay out on your behalf – similar to an executor of a will.

Writing your life insurance in trust brings with it a number of benefits:

  1. Reduces your inheritance tax (IHT) liability
  2. Avoids probate process
  3. Allows you more control over your policy.

Writing your life insurance in trust detaches the sum assured from your estate, reducing the amount you pay inheritance tax on, (40% over £325,000). As a result, your loved ones will receive a larger percentage of the pay out.

This detachment also means your loved ones don’t have to go through probate to gain access to funds. This process can be long, usually 6-9 months, but sometimes takes years. Therefore, your loved ones will also receive the funds sooner.

Finally, by putting your life insurance in the hands of a trustee, it means you can specify to them how you wish the pay out to be distributed.

Whilst this is at the discretion of the trustee, it does mean the funds can be used for what you desire rather than being demanded to fund your funeral or clear outstanding debts.

Policy terms

You should always carefully read the terms and conditions of your policy to determine exactly what causes of death you’re covered against.

As you age you’re at greater higher risk of certain illnesses. Therefore when taking out life insurance over 70 it’s important to thoroughly read the terms and conditions of your policy.

In some instances, more common causes of death may be written as an exclusion clause, so that if death occurs as a result of these, the policy is deemed invalid.

Exclusions may also be written into your policy if you’ve disclosed a previous medical condition or have stated the presence of a hereditary illness within your family.

Critical illness cover for over 70s

It’s possible to take out critical illness cover over the age of 70, but it’s likely to be extremely expensive.

Critical illness cover offers a pay out if you’re diagnosed with a serious, yet non-life-threatening illness, for example, a stroke, heart attack, blindness or some cancers.

It’s possible to obtain this type of cover, although it comes at an additional cost.

Due to the increased health risks to those over 70, it’s likely the cost of this add-on is going to be significant and therefore, may not be worthwhile.


A summary of your over 70 options

Over 50 plans:

Whole of life insurance

Funeral plans

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Whether you choose life insurance or a funeral plan, the cost of the monthly premiums and aspects within an agreement can vary significantly.

Using an FCA regulated independent broker, such as Reassured, allows you to easily compare a range of insurers and products to help you find the best solution.

We’ll take into account what it is you’re looking to cover, your available budget and the key factors which are important to you.

Then we’ll provide you with multiple policy quotes and information to help you make an informed decision.

Whatsmore, we can guide you through the application process and help write your life insurance in trust, (avoiding probate and 40% inheritance tax).

And the best part – Our award-winning brokerage service is completely free to use.


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Sources:

[1] https://www.gov.uk/government/publications/health-profile-for-england/chapter-1-life-expectancy-and-healthy-life-expectancy

[2] https://www.over50choices.co.uk/community/ashleys-blog/details/id/7838/whats-the-difference-between-a-guaranteed-over-50-plan-and-regular-whole-of-life-insurance

[3] https://www.sunlife.co.uk/siteassets/documents/cost-of-dying/cost-of-dying-report-2018.pdf