Hitting the big five-oh often ties in with notable life moments such as the kids cutting the apron strings and, with any luck, saying cheerio to what’s left of your mortgage. Cause for celebration or not, you'll probably find a bit more in your pocket at the end of the month.
While fewer financial responsibilities is generally a good thing, you might still want to help where you can. There are always good reasons to leave a little something to your loved ones when you’re gone, after all.
One of your best options for this is the rather neatly named over 50 life insurance. But what is it and is it right for you?
Over 50 life insurance explained
In a nutshell, over 50 life insurance is just like any other life insurance – a way to leave a lump sum for your loved ones when you die. That lump sum is essentially a gift to your family and it can pay for anything from your funeral to a holiday. Your insurer has no say in what happens to it.
When taking out your cover you can choose either an amount you want the policy to pay, or an amount you want to pay each month. It works like this:
- Choose a total pay-out figure: we’ll work out how much you’ll have to pay a month to get there.
- Choose a monthly payment: we’ll work out how much your policy will pay out based on how much you pay in. This can be from as little as £5 a month.
The big win with over 50 life insurance is the lack of a medical questionnaire. So, if your health isn't quite what it once was, it has no bearing on whether you can get a policy or not.
Life insurance or over 50 life insurance?
There are a few things to be aware of when weighing up whether life insurance or over 50 life insurance is your best bet.
Life insurance is what’s called a ‘term policy’ which means you’re covered for a specific length of time. With us, you have to be between 18 and 77 to apply and cover stops at the end of your policy term. You choose how much you want your policy to pay, as well as choosing whether to have the amount decrease over time in line with, say, a decreasing mortgage. Single or joint policies are an option.
Over 50 life insurance on the other hand is what’s called a ‘whole of life policy’ - it covers you until the day you die. Once you’ve had your cover for 30 years or the policy anniversary after you reach your 90th birthday, you stop paying but your cover carries on. Over 50 life insurance isn’t available as a joint policy.
Again, with our cover you need to be between 50 and 80 years old and a UK resident to apply.
It's worth knowing at this point that an over 50 life insurance policy has no cash-in value. This means, if you no longer want the cover and cancel it, you don't get back any of the money you've paid in.
Pros and cons of over 50 life insurance
The biggest tick with over 50 life insurance is the lack of a medical. You’re basically guaranteed to be accepted. The downside is the insurer is taking a bit of a risk here so, if you die in the first year and it’s not because of an accident, your policy will only pay out what you’ve paid in – not the cover amount.
Not to be overlooked is the fact that your payments always stay the same. That makes budgeting easier of course, but it does mean (depending how long you live) you could end up paying more in premiums than your policy pays out.
Although your policy will pay out the full cover amount after the first 12 months for any reason, bear in mind that inflation will reduce its value. It’s easy to overlook this after, say, ten or twenty years.
Also, although that guaranteed pay-out is always a good thing, it’s realistically not going to be enough to cover chunky debts. Think of it as a nice-to-have for the people you leave behind instead.
As always, if you’re not sure which type of policy’s right for you, seek the expertise of a financial adviser.