A complete guide to over 50s life insurance
Our free guide explains how over 50s life cover works, so you can decide if this kind of insurance plan could be right for you. Please bear in mind it is not financial or legal advice.
What is over 50s life insurance?
Over 50s life insurance is a type of life cover for anyone over 50. You pay a monthly premium and the policy pays out when you die. This money is called 'the payout' or 'the sum assured'.
The money is paid to loved ones and is often used to help cover your funeral costs, but it can be spent however they wish.
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How does over 50s life insurance work?
There are four main factors that affect how over 50s life insurance works.
1. Guaranteed acceptance with no medical
You can take out over 50s life cover without answering any medical questions. You are guaranteed to be accepted.
Some types of over 50s insurance products might offer better rates if you do answer some medical questions or reveal whether you smoke.
Other types of life insurance might ask you to complete a health or lifestyle questionnaire or have a medical examination in order to be accepted.
2. Fixed monthly premium
With most over 50s plans, the premiums are fixed. ‘Fixed premiums’ means they never go up. If you take out a plan today for £10 a month, that is the amount you will continue to pay – the insurance company can’t suddenly increase your payments.
You’ll be paying the premium for a long time, potentially the rest of your life. You should consider how much you can comfortably afford to pay each month.
There are some providers that may offer increasing premiums. This is called indexation. This means both the monthly premium and the payout can increase each year. It is important to be clear about premiums before you take out a plan.
3. Guaranteed cash lump sum
Over 50s plans pay out a guaranteed cash lump sum when you die, no matter how long you live.
You choose what payout you would like when you take out the plan. Because the payout never changes, you know exactly how much it will be when you die.
Some plans guarantee to cover the cost of specified funeral services. In this kind of plan the value of the payout will rise each year as funerals become more expensive. But the monthly payments remain the same.
The bigger you want the payout to be, the more you will need to pay each month as a premium.
Over 50s life cover is known as ‘whole of life’ insurance because it covers you ‘for the whole of your life’. Other types of insurance only pay out if you die within a certain time period, this kind of insurance is called ‘term life insurance’.
If you want to take out over 50s life cover, you could think about how much you would like to leave your loved ones and look into how much that would cost a month. Or you could work out how much you would be comfortable paying each month and see how much the payout would be.
4. Your age
To take out over 50s life insurance, you usually have to be aged 50, although some are available from age 49.
There’s also usually a limit on how old you can be when you take out cover, this changes from insurer to insurer but most stop offering cover once you reach 80 years old.
The older you are, the more your monthly premiums will be for the same payout.
What are the pros and cons of over 50s life insurance?
Like all insurance policies, there are pros and cons to this type of life cover. Let’s explore these in more detail.
Pros
Cons
- You'll need to pay every month for a set amount of time – you usually pay each month up to a predetermined date, after which the premiums stop, but the cover continues. With some over 50s insurance providers, you pay each month until you die. Some providers offer options to stop paying earlier but may reduce your payout as a result. Be sure to check the details of your plan before you commit.
- Waiting period – because insurers don’t ask you any medical questions, they make you wait a period of time before they will payout in full. This waiting period is typically 12 months but can be much longer with some insurers.
- You can't miss payments – if you stop paying in the early years of your plan then typically your cover will end, and you won’t get back the money you’ve paid in. Some insurers will allow you to stop paying after a set period, others will allow you to reduce payments or even take a payment holiday.
- You could pay in more than the payout – depending on how long you live, you could pay more in premiums than the cash payout. For example, if you took out an over 50s life insurance policy at age 50 and paid £20 a month for £6,000 of cover, you’d have paid more than the cash payout if you live more than 25 years.
Frequently asked questions
Key terms to understand
Here’s some of the phrases you might come across when you’re looking into over 50s life insurance.
Accidental death benefit
An amount paid out by the insurer if you die as a result of an accident during the moratorium. See Moratorium.
Arrears
If you don’t pay a premium on time and so fall behind, you are classed as being in 'arrears'. Typically, insurers will allow you a few ‘days of grace’ to pay before your policy is cancelled.
Assurance
Over 50s life insurance is sometimes referred to as ‘assurance’ because it will pay out on your death whenever you die. This is because death is certain (assured) to happen.
Beneficiary/Beneficiaries
The person, or people, who will receive the money paid by your life insurance when you die. In other words, the people who will benefit.
Cover
The amount of protection (in reality, the money) your over 50s life insurance will provide when you die. See also Sum assured.
Estate
Everything you own at the time of your death. Includes property, land, personal possessions, savings, investments and life insurance.
Fixed (e.g. fixed premium/fixed cash sum)
The premium and cash sum is set on the day your policy starts and will not change, unless you agree otherwise.
Funeral Benefit Option
An option available with some over 50s life insurance providers that enables the money your policy will pay out on your death to be paid directly to a funeral director and put towards the final cost of your funeral. The chosen funeral director will also make a small additional contribution to the funeral. Some may make the claim to the insurer on your family’s behalf.
Guaranteed acceptance
As long as you meet the age requirements and are a UK resident, you will not be turned down when you apply, regardless of your health.
Inflation
The general increase in the price of goods and services over time. According to the Office of National Statistics, in 1980 you could buy nearly three loaves of bread for £1, but today you would be lucky to buy one. Inflation reduces buying power over time.
Life assured
The named person on whose death the policy will pay out.
Moratorium
The amount of time you must wait before over 50s life insurance will pay out the full cover amount. For example, one or two years from the start of the plan.
Non-medical insurance
Insurance that only requires you to meet age and residency criteria to be accepted. For other types of life insurance, eligibility and the amount of cover offered is usually determined by your health and lifestyle.
Policy
The contract between the insurance provider and the person taking out the insurance. See Policyholder.
Policy documents
The documents you receive when you take out over 50s life insurance. These include the policy schedule detailing the life assured, cover and payment details as well as full terms and conditions. These should be kept safely as they will be needed to make a claim.
Policyholider
The legal owner of the insurance policy. Whilst the policyholder is often the same person as the life assured, this is not always the case.
Premium
Your premium is the amount of money you must pay every month. Also called 'monthly payments'.
Sum assured
The amount of money the insurer will pay out when the policyholder dies. The sum assured can also be called the cover, lump sum, cash sum or payout.
Written in trust
A legal arrangement that lets you confirm who should receive the payout from your life insurance. Writing your policy in trust means the payout will be outside of your estate for inheritance tax purposes and does not need to go through probate, so your loved ones could get access to the money more quickly.
Underwritten
Underwriting in insurance is when an insurance company decides how much cover (or what payout) a customer should receive – and how much a customer should pay for it. It is the process of measuring risk and how much the customer should be charged for the insurance company to safely accept that risk. It takes into account factors like age, health, occupation etc.
Whole of life cover
Exactly what it says. As long as you keep paying your premiums when they are due, you will be covered for the rest of your life and the policy is guaranteed to pay out whenever you die.
Where to get financial advice
Here are some ways you can seek unbiased financial advice:
- Unbiased(opens in a new tab) – find qualified financial advisors
- MoneyHelper(opens in a new tab) – information on choosing a financial adviser
- Find a retirement advisor(opens in a new tab)
- Citizens Advice Bureau(opens in a new tab) – can offer online or face-to-face advice
- Money & Pensions service(opens in a new tab) – have lots of different contact options
Find out more about this type of life cover, how much it could cost, and why SunLife’s Guaranteed Over 50 Plan is the most popular over 50s life insurance.*
*Most trusted/UK's favourite – Source: Association British Insurers statistics(opens in a new tab).
The thoughts and opinions expressed in the page are those of the authors, intended to be informative, and do not necessarily reflect the official policy or position of SunLife. See our Terms of Use for more info.