Over 50s Life Insurance Guide

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If you’re considering your life insurance options now that you’re over 50, we understand there are many choices, and it can be difficult to decide. For instance, should you opt for an Over 50s life insurance plan, a whole of life insurance plan, or a term life insurance policy? Or simply put savings aside?

Everyone’s circumstances are different, and at the end of the day, you want to know that your loved ones are looked after once you pass away. That’s why we’ve compiled a helpful guide to help you understand your options.

What types of life insurance are available for over 50s?

When you are over the age of 50, there is a choice of life insurance options open to you. There are specific over 50’s life insurance plans available, and also more standard whole of life policies that pay out a fixed sum whenever you pass away. Alternatively, you could opt for a life insurance policy over a set number of years, that pays out if you pass away during that set period. We summarise the key differences below.

Specific over 50s life insurance

Over 50s insurance plans typically cover you for the rest of your life, working as a ‘Whole of Life’ policy.

These types of plans tend to be used to help towards things such as helping towards funeral costs, or perhaps providing a small inheritance, when you pass away. 

What do over 50s life insurance plans cover?

Over 50s life insurance plans provide a guaranteed payout when you die. You usually are not asked any questions about your health, and usually you are guaranteed to be accepted for cover. Typically a specific over 50 life insurance plan is usually only available to you, if you are aged between 50 and 80 years old when you apply. 

However because you aren’t asked any medical questions and are usually guaranteed to be accepted for cover, the cost of the cover is relatively expensive for a small amount of cover, and most insurers won’t cover you in full until you’ve held the policy for a specific period, such as 12 or 24 months. So, it’s really important that you check the policy conditions so you know exactly how long this period will be.

• May be beneficial if you have a limited budget.
• May be beneficial if you have poor health.
• Fixed payments and payouts make everything clear and easy to understand with no surprises.
• No medical questions are required, and generally you are guaranteed to be accepted.

Disadvantages:

• If you stop paying your premiums or end your policy, you don’t receive any money back.
• Because the amount of cover is usually fixed and relatively low, it may not be sufficient for your needs in the future. 
• Because the cover is usually fixed it won’t keep up with rising prices (inflation), so the amount paid out when you die, will buy less than it would do today.
• Some policies may not pay out in full (depending on the cause of your death) if you die within the first 12 or 24 months of taking out the policy.
• Some causes of death will not be covered, depending on the policy.
• Depending on how long you live, you could end up paying more in premiums that the amount that would be paid out when you die. 

Whole of life insurance

Non-age-specific whole of life insurance policies are also an option. Whole of life insurance (sometimes known as life assurance) usually requires medical history, and lifestyle (such as whether or not you smoke) to be checked prior to acceptance. These medical checks mean that acceptance isn’t guaranteed, so you may find you’re unable to get cover if you have poor health or pre-existing medical conditions.

What do whole of life insurance policies cover?

Whole of life insurance plans provide a guaranteed payout when you die. The payout that is stated in your policy when first taking out cover will stay the same when you pass away – this is the amount that your loved ones will receive. They will not have to pay any income or capital gains tax on this payout.

Advantages:

• May be beneficial if you are in good health.
• Payout is guaranteed as long as your cause of death falls under the policy’s terms and conditions.
• The payout total usually stays the same throughout your life, so your know how much your loved ones will receive when you pass away.

Disadvantages:

• Medical questions are required, so you are not guaranteed to be accepted.
• You may pay more than a term life policy, for the same amount of cover.
• Premiums could increase in the future.
• Because the cover is usually fixed it won’t keep up with rising prices (inflation), so the amount paid out when you die, will buy less than it would do today

Term life insurance for over 50s

Unlike a ‘Whole of Life’ policy, a ‘Term’ policy provides cover for a set amount of time, which typically ranges from 1-50 years or more, depending on the policy chosen. The basis of a term life insurance policy can work in several ways, it can be set up as  ‘Level Term’, ‘Decreasing Term’, or  ‘Increasing Term’.

• Level Term Life Insurance – the amount of cover and your premiums are fixed for the chosen term and a lump sum is paid out should you pass away during the term of the policy.
  
• Decreasing Term Life Insurance – the total amount of your cover reduces every year over the term of the policy. Typically, it’s taken out alongside a capital and interest mortgage and to match the mortgage term. Premiums are also fixed, even though the cover deceases eventually to zero at the end of the chosen term. Because of this it usually costs less over the term than a level term policy for the same initial amount of cover.
  
• Increasing Term Life Insurance – with this type of policy your cover increases each year to help counteract the effects of rising inflation. The amount you pay each month for your cover also increases over your chosen term, as your cover increases.

If you are over the age of 50, you can take out a term life insurance policy depending on the insurer’s specific requirements. At LV=, our life insurance policies are available to UK residents aged 17 to 84 for decreasing and level cover (with cover expiring before you reach age 90). If you want to apply for a policy that can be inflation-linked, then we have partnered with LifeSearch to offer independent advice.

What do term life insurance policies cover?

Term life insurance policies pay out if you die within the plan’s term and give you the flexibility to choose the cover you need specific to your circumstances. This financial support can be used to help with paying off a mortgage, assisting with a child’s further education and more.

Terminal illness cover is often included in life insurance policies, but it’s important to clarify the specifics of this with your insurer.

Advantages:

• Can be cheaper than some whole of life policies.
• Can be used to help repay  larger expenses like mortgages and loans in the event of your death during the chosen term.
• Premiums can be guaranteed, so you know each month what it will cost.
• Helps your family with covering ongoing costs such as children’s education and bills, should you pass away during the period your policy lasts for.
• You are covered for the duration (term) of the policy.

Disadvantages:

• Will require more upfront information from you when compared to specific over 50s life insurance, and possibly a medical report.
• Only covers you for a set period of years, so it’s not really suitable  for covering funeral costs or providing an inheritance.
• If you stop paying for your policy, it will end, and you won’t get anything back.
• Tends to be cheaper to take out when you are younger.
• If you survive to the end of your policy term your policy ends and you’re no longer covered. You get nothing back when it ends.

Is it worth having life insurance over 50?

Whether life insurance is worth having is dependent on several factors. If you aren’t sure, it’s best to seek advice. At LV=, we have chosen to partner with LifeSearch to offer independent advice on which protection products are right for you.

Key considerations for whether life insurance is right for you include:

• Your health and life expectancy.
• The size of your current savings pot – do you already have enough to cover the costs you want to protect?
• If you have outstanding debt to pay off (like a mortgage).
• Financial stability and whether can you commit to paying monthly premiums.

Ultimately, having life insurance in place can help those you leave behind who would suffer a financial loss in the event of your death. Whether that’s helping to pay off a mortgage, loan, or to keep up with rent payments, or to leave gifted funds behind. 

What about a savings account instead?

Whether savings or life insurance are more beneficial to you is dependent on your circumstances. For instance, if your mortgage is paid off and you are satisfied with the amount in your savings account, then life insurance may not be something you need. But if you have larger outstanding debts and want peace of mind left for your family, life insurance may be better suited to your circumstances.

The benefits of a savings account over life insurance are that you can access your funds whenever you want, and you have the flexibility to deposit funds when available. Also with a savings account the money paid in, will remain there until you need it, whereas with life insurance you are paying for the peace of mind that a lump sum will be paid out if your die. You don’t get anything back if your life insurance ends and you haven’t died. The downside of using savings, is that if you need the money for other things, it would leave you without any back-up to support your family should you pass away.

How much does life insurance cost for over 50s?

How much a life insurance policy costs will depend on several factors. It will depend on:

• The provider
• The type of cover such as level, decreasing or increasing
• Your age
• Your health and lifestyle, which includes whether you smoke
• The length of your term (if opting for term insurance)
• The amount of cover

What about critical illness cover for over 50s?

Some insurance companies offer critical illness cover as an additional option with their life insurance – so don’t assume it comes as standard. Critical illness gives you additional peace of mind that you’re protected should you be diagnosed with a specified illness (as defined by the insurer) and your illness meets their definition.

At what age is it too late to get life insurance?

This depends on the insurer – at LV=, you can apply for life insurance until age 84 for decreasing and level cover, so it’s best to check.

How do you purchase life insurance?

There are several ways that you can purchase life insurance when you’re over 50. You could get a quote and go directly through an insurance provider, use a comparison website to compare provider quotes and apply through there, or utilise a financial adviser or specialist adviser like LifeSearch.  

Does LV= provide a specific over 50s life insurance product, or a whole of life product?

LV= no longer provides specific Over 50’s whole of life cover products, known as a 50 Plus policy, or any whole of life insurance products.

Today, LV= has a choice of term life insurance products available and can arrange level and decreasing Life Insurance for over 50s. LifeSearch can offer you independent advice on which protection products are right for you, if you need it - request a call back.

If you are an existing customer and need to make a claim then you can do so on our contact us page.