What is over 50s life assurance?
Life assurance is one of those things which many people put off, because no one wants to contemplate their own death. But it’s important to think about how your loved ones are looked after once you’ve gone.
If you’re over 50, read our easy-to-digest guide to getting the right life insurance for your needs.
Introducing over 50s life assurance
You might think that if you’re over 50, approaching retirement or are already retired it’s too late to take out a life insurance policy. But that’s not the case. There are insurance policies on the market specifically tailored to those over 50. And you can often take one out without needing to do a medical or fill out medical questionnaires.
Typically, this low-cost product is used for covering the costs of funerals and to cover any small debts you may have.
How does it work?
Over 50s life assurance policies work in more or less the same way as other life insurance policies – the payout can be used to pay off a mortgage or support loved ones when you die.
Many people over 50 take out a policy so that they can leave money to their children or grandchildren, or cover funeral costs, for example.
What type of over 50s policies are available?
Over 50s policies are generally whole of life which means the policy lasts for life, with the premiums remaining the same for the duration of the policy. You will keep paying the premium for a set number of years or until you die.
The policies usually pay out a lump sum if you die during the term. But you may find that there is an initial period (usually a year) during which time the full benefit will not be paid if you die – because you won’t have yet contributed enough into the policy to receive the full benefit. You will usually receive an amount equal to the premiums paid, however.
Who is it suitable for?
You don’t usually have to undergo a medical assessment or complete a medical questionnaire in order to take out an over 50s life insurance policy – which makes them suitable if you have a poor medical history. However, if you’re in good health, you may find that a standard life insurance policy is better value.
There is often a maximum age limit on over 50 policies – for example, you may only be able to apply if you are aged between 50 and 80.
Some things to check
Don't ignore the small print. This will spell out what's covered and what's not covered. It's normally included in a Key Facts or Key Features document, and you should compare various policies' features to determine which one is best for you.
- Make sure that you take out the right amount of cover for your circumstances. You may have paid off the mortgage and have fewer debts later on in life so this will impact on how much cover you’ll need.
- Think about what kind of insurance you already have – you might have an insurance policy through your employers or to cover your mortgage.
- Depending on how long you have a policy for, the amount paid out on your death may work out as less than the total amount you’ve paid in.
- It’s worth bearing in mind that the cash lump sum you will receive is fixed so inflation may reduce what you can buy in the future. You should review your cover to ensure that it remains adequate over time.
- You should also find out if a policy has a cash-in value, which allows you to end the policy and get the money you have paid in back. A cash-in value may not necessarily be equal to the money paid – it could be more or less.