What is the point of taking out over 50s life insurance?
Not one of us considers aging, yet while a lot of things improve with age, life insurance premiums do not fall into this category.
As you age taking out life insurance generally gets more expensive as life insurance companies assess you as a higher risk because there is a greater likelihood of them paying out on the policy sooner than, say, if you were in your 30s.
Furthermore, you are also considered a higher risk as you get older if you suffer from poor health or a condition like diabetes. However, individuals aged between 50 and 75 years of age (up to 85 years of age with some insurance companies) can obtain an over 50s plan which provides basic life cover for a few pounds per week.
The reason the premium is so cheap for the over 50s is that, unlike traditional life insurance policies, the over 50s life insurance plan does not necessitate a medical examination or health questionnaire. Moreover, you are not required to make any statements about the current state of your health, which renders it especially attractive should you be a diabetic.
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How does it work?
You pay a monthly premium for a guaranteed cash lump sum pay out when you die. The amount of pay out is dependent on the cover level you select. It is vital to note that inflation will decrease what your cash is going to buy in the future. Hence, you ought to factor this in when choosing the cover level.
In the majority of cases you cease paying the premium when you reach 90 (85 for some insurers). However, you continue being covered by the policy for the rest of your life.
The majority of insurers do not pay out should you die within the first two years unless you do so by accident. However, certain insurers will pay out all of what you have paid in plus an additional 50%. So, do check your policy.
Advantages of over 50s life insurance
The main advantage of the over 50s life insurance plan is obtaining inexpensive life cover without having to make any statements about your current state of health.
Over 50s life insurance is sold as a total life policy, to cover you up to your death, unlike the term policies available which will purely cover you should you die within a set period of time whilst the policy is in force.
You do have an option of obtaining a standard term assurance policy, which covers you should you die within a set amount of time. However, this may not necessarily have the benefits you need which you would receive from the over 50s life cover policy.
These policies offer you specific additional benefits which are not offered within general policies that people of any age can take out.
The majority of policies offer guaranteed acceptance which is a godsend for those with health issues.
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Moreover, over 50s life insurance can have fixed premiums, so you there is no need to be concerned about the policy getting more costly as you age. However, this means your pay out is not going to increase in line with inflation, hence, your family could be worse off.
They usually provide funeral benefits which can help towards the cost of cover of your funeral. The average cost of a funeral is said to be £7,000 so any financial assistance with this would be welcome.
You can also obtain free life cover after you reach 90 years of age, dependent on the life insurance company. You need to check the terms and conditions with care. Certain insurers just pay out should you die from an accident in the first couple of years, given that insurers do not wish to encourage individuals with an existing condition to take out a policy which is claimed on straightaway. Check the policy terms and conditions to find out how long this period lasts, and just sign up to a policy you are content with.
Disadvantages of over 50s life insurance
If you have the policy for 30 or 40 years you could end up paying out more in premiums than the actual pay out. It is also worth remembering that this is not a savings plan, so should you decide to cancel the policy before you are 90 (85 for some insurers) then you won’t receive any money.