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How Much Over 50s Life Insurance Do I Need?

Last updated 15th March 2022

5 min read

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Working out how much life cover you need is an important but challenging stage in the process of taking out over 50s life insurance. When choosing your level of cover, you’ll want to make sure that the payout is enough to support your loved ones with particular costs they may face in the event of your death.

This can seem overwhelming at first but there is a simple way to look at it: you’ll need to add up the costs that you want the lump sum to cover and subtract the value of any existing assets that could be used to cover these costs instead.

This guide is designed to walk you through the process of calculating how much over 50s life insurance you need. Along the way, we’ll look at the different types of costs that you may want your payout to cover and help you through the calculation. This approach is far more reliable than using a generic life insurance calculator as it looks at all of your individual circumstances.

Please be aware that this article deals with guaranteed over 50s life insurance, and does not apply to other types of life insurance. A guaranteed over 50s plan accepts anyone over 50 and guarantees the final payout agreed when you start your plan. This type of insurance is perfect for covering funeral costs and other specific expenses, but isn’t intended for larger uses, like paying off a mortgage or supporting dependents long-term.


Which costs do you want your over 50s life insurance to cover?

The first step is to consider what you might want to leave a guaranteed sum of money for after your death. In the sections below, we’ll explore the most common types of expenses that a guaranteed over 50s plan could cover. You may think of other financial commitments that are unique to your own situation – be sure to factor these in when deciding how much life insurance you need.

Funeral costs

Many people choose to include the amount required to pay for their funeral in their life insurance policy. Bear in mind that funerals can be expensive. Our Cost of Dying Report 2022 found that the average funeral now costs £9,263 (+0.8% since 2019).

If you’re looking to ensure that your funeral costs are taken care of, another option is to consider taking out a funeral plan. A funeral plan is dedicated to this expense, whereas a guaranteed over 50s plan gives you more flexibility on how you use your money.

Leaving a nest egg for your loved ones

Aside from any financial need, you could use your over 50s life insurance to provide a gift to your loved ones. Used in this way, life insurance is a small monthly payment that means you’ll be able to leave a guaranteed sum of money behind after your death.

Paying off debts

While you may not need over 50s life insurance to cover a mortgage, it is possible that you could use it to pay off other kinds of debts. In some cases, personal loans and credit card debts will need to be paid off using money from your estate when you die. The terms of your debts may vary, and some may already be insured, so make sure you check the specifics and speak to an independent advisor if you are in any way unsure about what you owe and how to pay it.


Could any existing assets be used to cover these costs?

Once you know the amount you’ll need, the next step is to make a note of all your existing assets and consider which of these could be used to support your family after your death. This is an important and often overlooked aspect of working out how much over 50s life insurance you need, which could save you from overspending on your cover.

Only you will be able to tell how much your assets are worth and what costs they could be used to cover when you die.. That said, there are a wide range of different assets to consider, including:

  • Money kept as cash or stored in savings accounts
  • Stocks and shares
  • Property or land that could be sold to cover costs
  • Valuable personal possessions such as vehicles, jewellery and collectibles
  • Investments including annuities, bonds and other funds.

In some cases, you may also have another form of death benefit other than your insurance, which could help to cover some of the cost. For example, you may be enrolled on a pension scheme that pays out when you pass on, or you could be eligible for death in service benefit as part of your employment.


Calculating how much over 50s life insurance you need

Having worked everything out beforehand, the formula for calculating how much life cover you need is simple:

[The total costs you want your payout to cover] - [the value of existing assets that could cover them] = your life insurance payout requirement.

The key is to ensure that you’ve carefully thought through all of the potential costs that your loved ones could incur in the event of your death before moving on to the calculation. Check back over all of the considerations we’ve covered in this guide and ask yourself whether there are any other costs that are unique to your situation.

Calculating guaranteed over 50s cover vs other life insurance

The calculations for over 50s cover can be very different to other types of life insurance, and are often simpler. With over 50s life insurance, the most important consideration is what you want the money to pay for, and how your existing assets might help you reach that goal.

Other types of life insurance – typically those purchased when you’re younger – may need to take into account your mortgage, income replacement, and the financial needs of your dependents. These calculations involve looking at your assets, current income, savings, the length of the financial support, and more.

The difference between over 50s and other types of life insurance is not a reason to rush your decision, but it is important to be aware that the calculation for a specific need is different to the calculation for mortgages and income replacement.

If you are ever unsure of what you need life insurance for, or what the best option is for you. Speak to an independent advisor.


When should I get over 50s life insurance

The sooner you start your guaranteed over 50s plan, the larger the payout will be. For example, if you start a £19.99 per month plan at 50, it will pay out £6,178, compared to £4,812 if you start it at 60 (correct as at August 2021).

If getting the biggest payout possible is important, then you should start your plan as soon as you can. However, if you’re aiming for a specific amount, you may have more flexibility. Even if you don’t want the largest payout, starting earlier and paying lower monthly premiums may still be a better option than waiting.

One of the benefits of a guaranteed over 50s life insurance plan is that your acceptance and final sum are guaranteed. Whatever stage of life you’re in now, if you’re over 50, you can use a plan like this to plan ahead with certainty.

How we can help

Working out how much life insurance you need can be a challenge in practice – and deciding on the level and length of cover may seem daunting at first. Don’t worry, we’re on hand to help.

We can guide you through the process of calculating how much cover you need on an individual basis. Call us on 0800 345 7766 or get a quote today and we’ll help you work it out.
Alternatively, if you’d like to read more before speaking to someone, take a look at our guide to over 50 life insurance.