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! In this article, we explain what Over-50s life insurance policies are, how they work and whether they offer value for money.
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.
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
- Guaranteed life cover
- No health questions asked
- No lifestyle questions asked
- No medical examination required
- Low minimum premium
- Premium fixed at the outset
- 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 insurance plan.
Term insurance - as the name suggests this type of policy 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.
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".