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:
- The children are already financially independent
- You have enough savings to pay for your needs after retirement
- Your mortgage has already been paid up
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:
- Those with assets of £325,000
and above.
Inheritance tax is levied on money and assets that you will leave behind upon your death, as well as some gifts that you give to someone while you are still alive. For the 2013 – 2014 tax year, any properties above £325,000. This ruling will stay put until the year 2017. The beneficiaries of your estate will be the ones who will pay the inheritance tax bill.
- Those who need funds for
end-of-life costs.
This includes any possible hospitalization, as well as the cost of a funeral. The average cost of a funeral in the UK for 2012 is £3,284. The average cost of inpatient care for the last year of a person’s life is £8,000.
- Money to leave the surviving
spouse.
A death of a spouse is not only emotionally devastating. It can be financially devastating as well. Without the presence of one spouse to help care for a sick spouse, the surviving spouse may need more funds to help prepare for the eventual need for residential or nursing home care.
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
- Age and longevity.
The good news is that people live longer today. With advances in medicine and an increased awareness of the need for a healthy lifestyle, we see a lot of people surviving (and even thriving!) during their 80s and 90s. That is why it is possible to find an insurance company who is willing to provide insurance coverage for seniors – this includes not just whole life products, but also term life insurance and permanent insurance products.
- Health condition.
Consider your health. Do you already have a chronic illness like diabetes or heart disease? This can seriously affect the premiums you will be charged with.
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.