The right life insurance policy for those over 50

What is the right life insurance policy for those who have reached the “golden” age? Or, do people at this age actually need life insurance? Let’s get to the second question first. Life insurance exists to provide financial protection in the event that the insured dies.

Why do you need life insurance if you’re in your 50s?

Life insurance may not be necessary for those in their 50s if:

Inheritance Tax Facts

  • For singles, anything above £325,000 is levied a 40% tax.
  • For married individuals or those in a civil partnership, some allowances are applied so that assets are passed on to the surviving spouse/partner that lower inheritance taxes or allow the inheritance to be tax-free.

*Rates are for the 2013 – 2014 tax year.

**The worth of the estate includes money, property and investments, but expenses and debts are deducted.

However, life insurance is a good idea for the following:

Life Insurance Choices

There are a number of options to help address the above needs:

Funeral Plan. If the cost of a funeral is the only concern, a funeral plan may be a good option. This covers a major portion of the expenses involved in a funeral and burial.

Term life insurance. You can opt for term life insurance that will cover you for a specific number of years, say 20 or 30 years. However, this policy may be subject to regular reviews (and increases) on the premiums based on your age and health condition. If you opt for term insurance, be sure to find one that’s guaranteed renewable so that you can opt to extend the cover after the coverage period has passed without the need to submit any proofs of insurability (such as going through a medical exam). It is also important to note that at 50 or above, the cost of the coverage may be more expensive as the years go by.

Whole life insurance.  This starts with the coverage amount but over time and as you continue to pay the premiums, the cash value of the policy will also grow. This is more expensive than a term life insurance policy, but is more ideal for the needs defined above, since this provides you with lifetime coverage, as opposed to the temporary coverage provided by term life insurance.

Over 50s Fixed Plan. There are life insurance products that are especially designed for the over 50s. The advantage of this type of plan (for most over 50s life insurance products, that is) is that you are guaranteed acceptance and the cover will continue for the whole of your lifetime.

Some Points to Consider when Buying Insurance at the Age 50 and Above

Some interesting Later Life facts:

  • Life expectancy at birth is at 82.3 years (females) and 78.2 years (males)
  • 2025 life expectancy at age 65  projections are at 88.3 (females) and 86.1 (males)
  • At age 65, females are projected to live 11.7 years in good health, while males can expect good health for another 10 years.
  • Of the close to 500,000 people who died in England and Wales in 2009, 82.5% were aged 65 or above, with 2/3 of this at age 75 and above.

*based on ageUK’s Later Life in the United Kingdom issued on December 2012

Comparing a Level Term Insurance with an Over 50s Cover

Over 50s plan Level Term Plan
Amount of coverage A maximum sum insured amount applies Higher maximum amount of insurance
Time limits/considerations

If the Person Insured dies within 2 years, premiums will be refunded but there will be no death benefit paid, unless death is caused by accident.

Waiting period may apply, but only for relevant facts that were not disclosed during the time of application.

Type of cover Only for a single life Can be issued as a single or joint life cover
Medical underwriting

Acceptance is guaranteed, so there is no need to provide medical proofs, except if you answer “yes” to the existence of a listed illness. This, however, can result in your application being denied.

Medical underwriting s applied, with doctor’s report required.

Premiums

Since this is a guaranteed acceptance product, those in good health will pay more expensive premiums.

Premiums are evaluated and rated on an individual basis, depending on the applicant’s medical condition and other factors.

Updated on: 04.06.2013

To secure your family's future, fill in the form on the right and get your term life insurance quote now.

Types of insurance:
Term life insurance 101:
Life insurers:
*Scottish Provident 2012 life cover claims paid report.
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