You have probably seen the advertisements on TV or in the newspapers for Over-50s life insurance. Life insurance with guaranteed acceptance, no medical questions asked and a free pen or store gift card to boot! These simple life insurance plans aimed at people over the age of 50 are often marketed as funeral plans but can be used to leave some money for your beneficiaries when you die to take care of any other financial needs or just provide a little nest egg.
In this article, we explain what Over-50s life insurance is, how it works and if provides good value for money. We describe how to arrange a call with a specialist life insurance adviser* with access to Over 50s life insurance policies from across the market and alternative options to consider before you make your mind up.
What is Over 50s life insurance?
Over-50s life insurance is a life insurance policy that covers you for the rest of your life, until you die and offers a guaranteed lump sum of tax-free cash. Unlike term life insurance which only pays out if you die within the term (number of years) that you are covered, Over 50s life insurance will pay out whenever your death happens and if you live a long life, you may even stop paying for it during your lifetime.
Many, but not all, over-50s life insurance policies will become paid up at a specified age which may be between 85 and 95 years old. Most over 50s life insurance policies will also include a qualifying period of between 12 months and 24 months. If you die during this period of time, your beneficiaries will usually only receive a refund of your monthly payments unless your death was caused by an accident. The full cover amount will be paid if your death happens at any point after the qualifying period has elapsed.
How does Over-50s life insurance work?
There are a number of features that distinguish Over-50s life insurance from other types of life cover and these include:
- Acceptance is guaranteed as long as you're over 50 and under 80 usually
- No health questions are asked and no medical examination is needed
- The monthly premiums are fixed and do not change after you start the policy
- Most policies pay out a fixed amount on death
- The level of cover available is usually between £1,000 and £20,000
- Depending on how long you live, you could pay in more than is paid out on death
- Normally premiums must be paid for a minimum of one or two years before a claim can be made
- Generally used to cover funeral costs
Pros and cons of over-50s life insurance
Pros
- Guaranteed life cover
- No health questions asked
- No lifestyle questions asked
- No medical examination required
- Low minimum premium
- Premium fixed at the outset
Cons
- You could pay in more than is paid out on death
- The amount of cover is limited
- A qualifying period of up to 3 years may apply before a claim will be paid
- It may be cheaper to buy other types of life insurance if you are healthy
What is the alternative to over-50s life insurance?
Whole life insurance - if you are in good health and still in your 50s then whole life insurance may offer better value for you in the long run. If you are accepted for a whole of life insurance policy then the payout could be as much as 40% higher than an over-50s life plan would pay.
Term insurance - as the name suggests this type of life insurance will only insure your life for a set number of years referred to as the term. The term is decided at the outset and once the term expires then the life cover ceases. Term life insurance is usually more cost-effective than whole-of-life insurance policies.
Savings account - you can choose to put your money in a savings account and build a pot of money that can be left to your beneficiaries upon your death instead of putting that money towards paying for life insurance. While you would have the advantage of access to the funds during your lifetime, the obvious drawback to this alternative is that it may return less money than a life insurance would if you were to die prematurely. Also, inflation may erode the value of the money that you save if the interest that you earn does not keep pace with inflation levels.
How to find out if Over 50s life insurance is right for you
Over 50s life insurance policies usually come with some amount of 'small print' that tells you that you could end up paying in more than the policy pays out as well as information about how long you will have to pay your premiums before you can qualify for a full payout. These and other features of an Over 50s life insurance policy mean that you should compare life cover policies carefully before you commit to a policy.
Many people buy over 50s life insurance so that the sum paid when they die will cover their funeral expenses. However there are other options you should consider when planning for your funeral expenses and you can read about alternative solutions including prepaid funeral plans in our article, "Life insurance or Funeral plan - which is best?".
One of the best ways to ensure that you understand the life insurance you choose in terms of what it will and will not cover is to speak with a life insurance specialist. A specialist adviser not only searches a wide range of life insurance products on your behalf, but they usually understand each life insurance provider's terms and conditions so that it can be matched to your needs.
At Money to the Masses, we have vetted and partnered with a leading life insurance broker, Howden Life & Health* where the advisers are well-versed in Over 50s life insurance policies - you can arrange a call to discuss your needs with no obligation to buy.
Over 50s life insurance with free gift
A free gift can be a great incentive to buy your life insurance cover but you do need to consider the cost of such incentives if what you pay into the policy will exceed what is paid when you die. As with many such incentives, the insurance companies have usually factored the cost into your policy. Nevertheless, we have taken a look at the best offers and summarised them for you to read in our article, "Over 50s life insurance: We rank the best FREE gifts".
If a link has an * beside it this means that it is an affiliated link. If you go via the link, Money to the Masses may receive a small fee which helps keep Money to the Masses free to use. The following link can be used if you do not wish to help Money to the Masses - Howden Life & Health
