What is over 50s life insurance?
Over 50s life insurance, as the name suggests, is a life insurance policy specially designed to meet the unique needs of people aged 50 and over. It is sometimes referred to as ‘over 50s life cover’ or an ‘over 50s plan’.
You pay in a fixed, monthly premium that you can afford and the policy will pay out a fixed, cash lump sum to your beneficiaries, upon your death.
For many, life definitely begins at 50. This is often the age when your mortgage is largely paid off, the children have left home and well-paid management jobs are secured. However, you may need life cover that reflects these changing circumstances.
Over 50s policies are a form of whole of life cover and therefore are guaranteed to pay out when you die. This is sometimes called ‘life assurance’ – as a pay out is assured at some point.
In contrast, a traditional term life insurance policy, provides cover for a set period of time, (the term). Although these policies tend to pay out much larger sums.
The main advantages of an over 50s plan are:
- You are guaranteed to be accepted, (even if in poor health)
- You do not need to undergo a medical exam or answer health questions, (unlike standard life insurance policies)
- They are quick and easy to set-up
- You can choose, how much you wish to pay, based on what you can afford.
Why might you want over 50s life cover?
People choose to take out over 50s life insurance for a variety of reasons. From our experience at Reassured, common reasons include:
- Covering the cost of a funeral, (average UK cost in 2017 is over £4,000) – Visit www.moneyadviceservice.org.uk to learn more about funeral costs
- Leaving an inheritance to the children or grandchildren
- Ensuring the remaining spouse has adequate finances to maintain their lifestyle, (living costs, household bills etc)
- Covering unpaid bills, or outstanding debts.
Another common reason to take out an over 50s policy is cost. Although you can pay more, many choose to pay just a few pounds each month, making cover very affordable.
Once you pass 50, getting standard life cover can become expensive, as statistically you are more likely to die during the policy term.
There could also be restrictions on the length of the term an insurer is willing to protect you. As a result, an over 50s plan could be the best option.
However, it is important to remember there is a chance, especially if you have just turned 50 and are in good health, that you could pay more into the policy than it will ever pay out. So, depending on your individual circumstances, traditional term cover or a whole of life policy may represent better value for money.
See this great tool from life insurance provider Aviva, that helps estimate your life expectancy www.direct.aviva.co.uk.
Over 50s waiting periods
Having no medical and being over 50, makes you ‘higher risk’ and consequently insurers will employ ‘waiting periods’ at the beginning of the policy, to mitigate their risk.
- Over 50s policies will not pay out within the first 12 or 24 months (depending on the insurer) – this is known as the waiting period
- During this time you will, however, receive a full accidental death benefit. So if you die as a result of an accident, you could get up to 3 times the assured sum – (exclusions apply)
- If you do die during the initial waiting period (of natural causes), the premium amount you have paid in will be returned to your beneficiaries
- Over 50s life insurance providers will have different terms on their particular waiting periods
- After the waiting period has expired, there are no exclusions and you are fully covered.
Call our Reassured experts today on 0808 168 2025 and let our impartial life insurance consultants provide you with a number of suitable over 50s quotes for you to compare.
The policy pay out
- Paying into an over 50s life insurance plan means your beneficiaries, normally family members, will benefit from a fixed pay out when you die
- However, there are ways you can make it easier for your beneficiaries to benefit from your policy
- Normally a life insurance policy will form part of the deceased’s estate
- This means it will be bundled in with all your assets, then divided to the beneficiaries by the executor
- The problem is that if your estate, which includes your life policy, adds up to over £325,000, then it will be subject to 40% inheritance tax
- Putting your policy into ‘trust’ means you hand over control to someone else to look after on your behalf before it is paid directly into your beneficiary’s account when you pass away
- This ensures that your beneficiaries benefit fully from your policy and also that they receive the funds faster, (as probate is avoided).
Fix your premiums
- Taking out life insurance in your 50s is a great idea
- By securing your policy now, you will be able to fix your premium at today’s rate
- Leaving it until you reach your 60s or 70s will mean you pay significantly higher premiums
- If you have developed a serious illness in later life, you might struggle to be accepted onto a standard life policy.
An example scenario:
Derek is a 55-year-old lorry driver in poor health. He is severely overweight and recently suffered a heart attack.
He has 3 children, all in their 20s, who he does not want to burden if the worst were to happen. He has little in the way of savings.
His recent health scare has made Derek think seriously about the future and what he would leave behind. However, because he represents a high risk for insurers, he is unable to secure traditional life cover, at an affordable price.
He decides his best option is to take out an over 50s life insurance plan; there was no medical or health questions on the application and he was able to set his premiums at a rate he could afford.
Because Derek fears he might not live into his 70s/80s, he feels an over 50s plan represents the best value, as he is unlikely to pay in more than the policy pays out.
Over 50s life insurance in summary:
- Guaranteed acceptance – (A policy can be taken out by anyone who is resident in the UK for at least 6 months of the year and aged between 50 – 80)
- No medical exam required
- Medical history not taken into account, (although smoking can increase the cost of the policy)
- Good option for those in poor health
- Choose a monthly premium you can comfortably afford
- Premiums are fixed
- Pays out a fixed lump sum
- Many over 50s policies now include a clause that gives you free cover after you turn 90.
- The total sum paid in premiums could exceed the fixed pay out
- If you miss a premium payment you might lose your money
- There is a waiting period of 12 or 24 months, (depending on the insurance provider)
- If you die during the ‘waiting period’, you may only get back what you have invested
- You can not cash in over 50s plans
- Inflation may reduce the value of your pay out.
Why use Reassured to compare over 50s life insurance?
- Life insurance is what we do, (in fact, it is all we do)
- We will scan the market on your behalf, finding the most suitable and competitive quotes available
- 13,500+ people cannot be wrong! We have an ‘Excellent‘ average Trustpilot rating of 9.6/10
- We are completely independent and impartial
- We never charge a fee for our broker services
- There is no obligation to take out cover
- We are non-advised – we simply listen to your personal circumstances and find the most suitable policies.
Talk to our Reassured consultants on 0808 168 2025 and let us help you compare the best available over 50s life insurance quotes. Alternatively Start Your Quote online today – it only takes 2 minutes.