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Over 50s in the UK
With our average life expectancy in the UK increasing, it is encouraging people to look at making provisions for the future much later in life.
Perhaps you need some form of life insurance to:
- Leave an inheritance to loved ones?
- Cover the cost of your funeral?
- Clear all outstanding debt?
The average cost of a funeral has risen +122% over the past 15 years. According to a 2018 report from SunLife, this figure stands at £4,271.
Without adequate cover in place, this cost becomes the responsibility of your family. As will any outstanding debt in your name.
An over 50 plan is an affordable way to cover these costs, provide an inheritance or simply help your loved ones maintain their existing lifestyle.
What is over 50 life insurance?
An over 50 life insurance policy is often referred to as an ‘over 50s plan’ or ‘guaranteed over 50 plan’.
It adopts it’s guaranteed status because the policy lasts for life, guaranteeing a pay out when you pass away.
Unlike traditional term-based life insurance, an over 50s plan guarantees acceptance to all UK residents aged 50-85 years.
These policies do not require you to provide any information regarding your medical health.
For this reason, it is ideal for anyone within this age range who has a pre-existing condition or who would find it difficult/too expensive to obtain standard cover.
Over 50 life insurance no medical
A key benefit of an over 50s plan is no medical information is required to secure cover.
The guaranteed acceptance for 50-85-year-olds means those suffering with their health can still obtain life cover. Even if they have been declined elsewhere.
The lack of medical information required also makes the over 50 application quick and simple.
Sum assured (or pay out)
As with standard life insurance, you need to determine how much you can afford each month and how much cover you require.
Due to the unknown risk (because no medical information is collected), the available sum assured with an over 50s plan is significantly lower than that of other types of life cover.
This limit is usually somewhere between £10,000 – £25,000, but this varies depending on the insurer.
Cost of over 50 life insurance
Whether or not an over 50s plan is cost-effective is likely to depend largely on your age and health.
Generally speaking, over 50 life insurance is more expensive than other policy types with a comparable sum assured.
This is because insurers calculate the cost of your premiums based on the likelihood of a claim.
Due to the lack of medical information, it is impossible for insurers to assess this risk accurately. As a result, the risk is offset by hiked premiums.
This may benefit you if you are older or in poor health, as declaring your well being could increase traditional life insurance premiums to such an extent it becomes unaffordable.
In contrast, those at the opposite end of the scale may be paying inflated over 50s premiums when they could be benefiting from their good health and younger age.
However, those in the first instance need not worry as over 50s cover is available from as little as 20p-a-day.
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Over 50 life insurance premiums
All over 50 plans provided through Reassured boast fixed premiums, meaning your monthly payments never increase.
As time passes, however, circumstances may change (such as retirement) affecting your monthly budget.
Some insurers offer the ability to reduce your premiums in line with your sum assured, allowing you to maintain some cover at a lower cost.
Additionally, many over 50 plans only require you to pay premiums until a certain age. (Although, the cover remains valid for life).
This is usually the policy anniversary following your 90th birthday or 30 years after the policy start date.
Waiting period (or qualifying period)
Whilst acceptance for an over 50s plan is guaranteed, insurers mitigate their risk by implementing a waiting period.
This is a set period of time at the beginning of the policy where, if you die of natural causes, a pay out is not issued.
The waiting (or qualifying) period varies between insurers but is usually 12 or 24 months.
If you were to die within this period due to natural occurrences, any premiums paid will be refunded.
In some instances, life insurers will also offer a token pay out, (e.g. 50% of premiums paid).
During this waiting period, most policies do exercise full accidental death protection.
This means, if you were to die from an accident or unforeseen circumstances, a full pay out will be made.
Life insurance vs life assurance
Although often referred to as over 50 life insurance, an over 50s plan is actually a form of life assurance.
The key difference between life insurance and life assurance is whether or not a pay out is guaranteed, (or assured).
Life insurance pays out if you die during the policy term.
Life assurance lasts for the rest of your life and therefore, pays out when you die.
Over 50s vs funeral plan
Over 50 life insurance is commonly taken out as a means of paying for your funeral.
Choosing between over 50 life insurance or a funeral plan will depend on what you are looking to cover.
An over 50s pay out can be used for whatever your beneficiaries see fit; your funeral, future living costs, a nest egg etc.
Whereas a funeral plan can only be used to cover the cost of your funeral.
It covers the funeral director costs and, in some instances, third-party fees, (such as minister fees, cremation fees etc.)
The key benefit of a funeral plan is that it allows you to lock in your funeral director costs at today’s rate, avoiding further cost rises.
Whilst an over 50 plan pay out can be used towards your funeral, whether it provides sufficient funds to cover all costs depends on how much cover you have.
On the other hand, some funeral plans only cover funeral director costs and not third-party fees.
This means that whilst your funeral directors fees have been secured at today’s costs, your family are required to cover the rest.
In this instance, an over 50s plan may be more beneficial if the sum assured is sufficient to cover all expenses.
At Reassured, we offer funeral plans which cover all third-party fees, meaning that if you are only looking to cover funeral costs, this option is likely to be more beneficial.
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Over 50s vs term-based life insurance
Whilst it is still possible to secure term-based life insurance over the age of 50, it may not be cost-effective.
As you get older, the cost of premiums increases due to the increased likelihood of making a claim.
As a result, your monthly premiums may be too expensive. You may even be declined term-based life cover altogether.
This is when an over 50s plan becomes a great option, offering guaranteed acceptance and requiring no medical information.
However, for those at the younger end of the age range or in particularly good health, the opposite may be true.
It is also important to consider what it is you are looking to protect.
At the age of 50, you may still have a mortgage and some outstanding debt, whereas a 70-year-old is likely to have cleared their mortgage.
Term-based life insurance offers a much larger sum assured. Insurers are happy to provide this as the information gathered during application allows them to accurately determine risk.
Over 50s plans tend to be capped at a smaller sum assured (approximately £20,000) which may not be sufficient for the level of cover you require.
Finally, it is important to remember that term-based life insurance only pays out if you die during the set term.
Whereas an over 50s plan lasts for life and pays out when you die.
As a result, it is possible to pay more into an over 50s plan than it will pay out, if you live long enough.
Over 50s vs whole of life insurance
Like an over 50s plan, whole of life insurance is a form of life assurance.
This means that cover lasts for life and your loved ones are guaranteed a pay out.
The key difference between whole of life and over 50s, however, is the medical information required at the point of application.
Unlike an over 50s plan, whole of life insurance takes into account all of your medical information.
Therefore, those in poorer health could end up paying significantly higher premiums if they were to take out a whole of life policy.
Whereas, younger and healthier applicants are likely to benefit from lower premiums as risk can be accurately assessed.
Another thing to consider when choosing between these two policy types is the amount of cover you are looking to obtain.
Generally speaking, the sum assured available with an over 50s plan is significantly lower than that of a whole of life policy.
Therefore, if you are looking for a significant amount of cover, an over 50s plan may not be suitable.
With both policy types, it is possible to pay more into your policy than the sum assured, depending on how long you live.
However, some over 50s plans come with an age at which you cease making premium payments, (although your cover continues for life).
This is often the policy anniversary after your 90th birthday or 30 years after the start of the policy.
Joint over 50 life insurance
Unlike other forms of life insurance, unfortunately, it is not possible to obtain joint over 50 life insurance.
The presence of two lives on a policy further increases the likelihood of a claim being made.
Due to no medical information being disclosed, the risk to the insurer is unknown, therefore they do not wish to increase this risk further.
Over 50 life insurance with free gift
Many insurers offer a free gift as an incentive to take out cover.
Often this takes the form of a £50 or £75 Amazon/M&S voucher.
However, the value of a free gift versus the premiums paid over the term of the policy is insignificant.
Whilst a free gift is nice in the short-term, the most important thing long-term is to secure the right policy, at the best price.
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Over 50 life insurance for smokers
Typically, life insurance costs more if you smoke because of the increased risk you pose to the insurer.
However, with an over 50s plan, this may not be the case and your premiums may remain unaffected by your smoking.
Some insurers account for your smoking status even though no other medical information is gathered, whilst others will not even ask the question.
Therefore, as a smoker, it is best to use an insurer who does not take this information into account when calculating premiums.
As a result, it is best to compare quotes from multiple insurers to ensure you are getting the best deal.
Multiple over 50 plans
Like traditional life insurance, it is possible to have multiple over 50 life insurance policies.
The sum assured for over 50s plans tends to be much smaller than term-based or whole of life policies.
As a result, you may require multiple policies to ensure you have enough coverage to meet your needs.
Insurers tend to have an upper limit which they will cover you for, whether this is from one or multiple policies.
Therefore, if you are looking to exceed this amount, you may have to take out policies with different insurers.
As previously mentioned, over 50s plans tend to be more expensive than standard cover.
So, when considering taking out more than one policy, establish whether this is a cost-effective option.
What if you are aged in your 60s or 70s
An over 50s plan could still be a great policy option when in your late 60s or even 70s.
However, ultimately, it depends on your individual circumstances; age, health, budget and what you need to cover.
We have produced two in-depth articles which delve into the different options available to those in their 60s and 70s:
Funeral benefit option
Many over 50s plans now come with the chance to select a funeral benefit option.
It is very common for the proceeds from over 50 life insurance to be used to fund your funeral.
Therefore, you can choose for the policy pay out to go directly to a funeral director.
The particular funeral director is usually specified by the insurer with whom you arrange your plan.
The funeral director will then work with your loved ones to plan your ceremony.
If you choose this option, it is important to read the terms and conditions associated with your particular plan.
Usually, if the sum assured is not sufficient to cover the cost of your funeral, the balance will be requested from your loved ones, whilst any excess is gifted back to them.
This option is also likely to result in some form of a discount from the funeral director, such as 10% off or a gifted bonus.
If it is purely your funeral you are looking to cover, you may find it more beneficial to take out a prepaid funeral plan.
Writing your life insurance in trust
By writing your over 50 life insurance in trust you sign your policy over to a trustee upon your death, similar to an executor of a will.
This detaches the proceeds from your policy from forming part of your estate. Potentially reducing the inheritance tax you pay, (40% on everything over £325,000).
Writing your life insurance in trust also means that it is not required to go through probate before funds can be distributed.
As a result, your family will receive the policy proceeds faster.
Finally, it also allows you to specify how you would like the pay out to be distributed, (at the discretion of the trustee).
This provides greater control, ensuring your legacy is received by those you chose.
Reassured’s free trust service
Writing your life insurance in trust does not have to be complicated.
It simply involves filling in an application form, provided to you by the insurer.
Alternatively, at Reassured, we offer a dedicated free trust writing service, where our trained staff can guide you through the process.
We offer step-by-step guidance, ensuring your form is filled in accurately and fulfilling your wishes.
Making a claim
When the day comes, accepting the loss of a loved one is never easy.
At Reassured we do everything possible to offer our utmost support to your loved ones at this time.
Over 50s plans are renowned for a fast pay out, alleviating the financial stress on your family at an already difficult time.
A simple call to Reassured and we will guide your loved ones through the claims process.
Ensuring they have all the information they need to claim on your policy.
Key benefits of an over 50s plan:
- Guaranteed acceptance aged 50-85, (even if in poor health)
- No medical information or exam required
- Quick and easy application process
- Premiums may stop at a certain age, although cover remains intact for life
- Fast pay out when a claim is made.
Compare over 50 life insurance quotes
As with all life insurance, the cost of over 50 plans can vary significantly between insurers.
When arranging cover it is best to compare quotes to ensure you are receiving the right cover, at the best price.
At Reassured, we can do the hard work on your behalf and our award-winning brokerage service is free to use.
Our dedicated team will:
- Search the over 50s life insurance market on your behalf
- Present you with the best available quotes, so you can make an informed decision
- Complete the policy application on your behalf
- Ensure you understand all necessary aspects of the process
- We can also help you write your policy in trust, (if required).
Get in touch today and take the first step towards securing the financial future of your loved ones.
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