Over 50’s life insurance

Is there something magical about the number that makes over 50’s life insurance special? In principle, there is nothing so very different about buying life insurance at any stage in life, either before or after the age of 50. In other words, the principle of life insurance remains the same – you pay a regular premium and, in return, the insurer pays out to named beneficiaries an assured sum in the event of your death either within the agreed term of the insurance (term life insurance) or upon your death (whole life insurance).

Whether it is term or whole life insurance and whether you are over 50 or younger than that, life insurance is clearly an invaluable way of providing a benefit for surviving family or loved ones in the event of your death. The purpose of such a financial provision could be to clear any outstanding mortgage or debts or to cover the expenses of your funeral (which these days are estimated to cost an average of £6,000 or more).

The introduction of such cover specifically for the over 50’s, however, is a recognition of the fact that arranging life insurance becomes progressively more difficult – and expensive – the older we get. The risks taken on by the insurer are greater and the closer interest you would therefore expect the insurer to take in your state of health. The key attraction of most over 50’s life insurance, therefore, is that, generally, no medical is required and acceptance for the cover is guaranteed. Naturally, this can be a welcome feature of the insurance proposal process for anyone over the age of 50.

Because the insurer is assuming a greater risk, however, and because less is known about your medical history, the premiums may be slightly higher than those for a “standard” term or whole life policy. Nevertheless, most insurers offering over 50’s policies will do so with the guarantee that premiums will not increase.

The majority of over 50’s life insurance policies are for the whole of life – that is to say, cover continues until your death, whenever that is and there is no fixed term. Cover remains in place provided the premiums continue to be paid, although most policies require no further payment of premiums after the age of 90, but continue cover until your death.

Although standard term life insurance policies can be enhanced so that they pay out an increasing or index-linked benefit, so that it is possible to keep pace with the effects of inflation, over 50’s life insurance is generally restricted to an assured sum that is fixed at the outset. However, some insurers have introduced a feature that increases the assured sum by a given percentage (10%, for example) after a given number of years (typically five years) that the policy has been in place whilst the premiums you need to pay stay the same.

The actual price of the premiums will, of course, depend on the amount of life cover sought. Typically, the maximum levels of cover offered by this kind of life insurance are between £20,000 and £30,000. It is important to remember, however, that – as with standard life insurance – there is no “cash in” value of the over 50’s life insurance policy at any time.