Hitting 50. A milestone worthy of a massive knees-up or something you’d rather ignore in the hope it goes away?
Either way, it’s likely you’re now at the point where protecting your loved ones after you’re gone is uppermost in your mind. Having life insurance could help take care of your finances when you’re no longer around. This also means it’s one less thing for you – and the people you leave behind – to worry about.
The good thing about being in the half century club now means you have options to do this. As well as what we call ‘term life insurance’, there’s ‘over 50 life insurance’ too. But what are the differences between the two and which one’s right for you?
What is term life insurance?
Term life insurance (or just life insurance) runs for a specific length of time and pays out to whoever you choose if you die in that period. We offer two different types of life insurance:
- Level cover – the pay-out amount stays the same
- Decreasing cover – the pay-out amount goes down over time in line with, say, a mortgage
With us, you have to be between 18 and 77 to apply. In most cases there won’t be a medical exam, but we will need to know about any pre-existing medical conditions. Single or joint policies are an option too.
What is over 50 life insurance?
Over 50 life insurance is a way to leave a financial gift to your loved ones when you pass away. Depending on the amount, that money can be for almost anything – a holiday, funeral costs etc. The amount it pays out is usually smaller than life insurance which is designed more for covering big debts, such as your mortgage.
This policy is a type of ‘whole life cover’ – it doesn’t have an expiry date and it’s guaranteed to pay out regardless of when you die (it covers your whole life). The only thing to be aware of is there's a period of time after you have started the policy during which it won't pay out, usually a year or two depending on the provider. However, you will receive a sum equal to the premiums already paid.
If you have health problems, it’s useful to know that applying for over 50 life insurance doesn’t involve lots of awkward medical questions. With us, if you’re between 50 and 80 and a UK resident, acceptance is guaranteed.
Life insurance vs over 50 life insurance
So, there are pros and cons to both life insurance and over 50 life insurance.
If you’d prefer to know that the people you leave behind could get help dealing with the financial fallout of your passing, the bigger pay outs typical of life insurance might offer the security you’re looking for. If you’d simply like to leave a bit extra, just to cover unexpected costs or so your loved ones can do something nice in memory, you might be happy with the level of pay outs over 50 life insurance offers.
Be aware that pay outs aren’t necessarily guaranteed with life insurance. If you live longer than your policy term, your policy won’t pay out when you die.
Assuming you’ve kept up with your premiums as required, over 50 life insurance will always pay out. You just have to be aware that, depending on how long you live, you could end up paying more in than your policy pays out.
It’s worth noting that neither life insurance nor over 50 life insurance have a cash-in value. You won't get your premiums returned if you change your mind and cancel the policy.
As always, if you’re not sure which type of policy’s right for you, it could be worth paying for a financial adviser’s help.