In this article we examine how Over 50’s life insurance works to help you decide if it’s the right type of cover for you.
What Is Over 50’s Life Insurance?
Over 50’s life insurance is a type of life insurance that covers you from the age of 50 until you pass away, provided that you keep up with your payments.
You pay an agreed monthly premium. Upon death your insurer will pay an agreed tax-free cash lump sum to your specified beneficiary or beneficiaries.
It provides reassurance and peace of mind. You know that your loved ones will receive money when you are gone, or if you become terminally ill.
How Does Over 50’s Life Insurance Work?
A Fixed Monthly Premium
The premium is fixed on the vast majority of Over 50’s life insurance policies. This means that the monthly premium you pay remains the same until death, or until you reach 90 years old with some providers.
You could decide how much you would like to leave your loved ones, and how much that would cost a month. Alternatively, you could work out what monthly premium you would be comfortable paying and see how much the payout would be against that.
The bigger you want the payout to be, the more the monthly premium will be. It is possible, however, that if you live long enough you could pay more into the plan than the value of the payout.
A Guaranteed Tax-Free Lump Sum
Over 50’s life insurance will pay out a tax-free lump sum (payout) when you pass away. It is paid irrespective of how long you live for. You choose the payout amount when you take out the cover. The amount of cover, however, is significantly lower than what you’d get with a regular life insurance plan.
The payout amount is fixed so you know exactly how much the beneficiary (or beneficiaries) will receive when you pass. This can help to alleviate financial pressures and give your family space to grieve.
To take out an over 50’s life insurance policy, you normally have to be aged 50 or over. Some insurers will cover you from 49 years old. Most insurers will not cover you if you are aged 80 or over, but this varies from insurer to insurer.
The older you are when you take out the policy, the higher your monthly premium will be. If you want a payout of £3,000 and are 70 years old, you will pay a higher premium each month. If you took out a policy for the same amount at 50 years old the monthly premium would be lower.
The older you are when you take out the policy, the less cover is available to you.
Guaranteed Acceptance And No Medical
You can take out over 50’s life insurance without having a medical or answering any questions regarding your health or lifestyle. Acceptance is guaranteed.
For other types of life insurance, you may have to answer questions relating to your health or complete a medical examination. This can all take time and delay you getting cover.
You can expect to receive a reduced amount of cover if you smoke.
Why Take Out An Over 50’s Plan?
Your insurance needs can change as you become older. Providing a lump sum to your family when you pass away can become a priority.
There are many reasons why people take out an over 50’s plan. It could be to help their family pay off debts so they don’t have any financial struggles. It could be to fund their children’s education, to cover funeral costs or to help pay off the mortgage so their family can keep their home. The payout can be used by the beneficiary for any purpose.
Over 50’s plans are suitable for people who don’t have much in the way of savings or investments to pass on to their family but can afford the monthly premium. It’s also a good type of cover for people in poor health.
An over 50’s plan isn’t suitable for everyone however – this depends on your personal circumstances, financial situation and lifestyle. If you are single and have no dependents, or if your partner earns a good salary, then there’s little point in taking out an Over 50’s plan.
If an Over 50’s plan isn’t right for you, Term Life Insurance or Whole of Life insurance are good alternatives.
What If You Have A Pre-Existing Medical Condition?
Unlike many other types of life insurance, medical evidence is not required for an Over 50’s plan. This means there’s no need for a Doctor’s report which can often delay the process. Cover can usually be secured relatively quickly and no medical questions will be asked.
How Much Does An Over 50’s Plan Cost?
It’s impossible to give an estimate of premium cost without taking personal circumstances into account during the underwriting process. Everyone’s situation is different.
The premium cost for an Over 50’s plan will be based on your age when taking out the policy and the payout amount. You will, however, pay a lower premium for Over 50’s cover compared to regular life insurance.
The Insurance Surgery are expert Over 50’s life insurance brokers. We know which insurers to approach to find the best cover for you at the most competitive premiums.