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A complete guide to over 50 life insurance

Justin Cole - Life business director.

Justin Cole

Life Business Director

Last updated 24th September 2020

This article explains how over 50 life cover works, so you can decide if this kind of insurance plan could be right for you. Please bear mind it is not financial or legal advice.

What is over 50s life insurance?

Over 50 life insurance is an affordable type of life cover for anyone over 50. You pay a monthly premium and the policy pays out a cash lump sum – known as ‘the payout’ or ‘the sum assured’ – when you die.

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.

How does over 50 life insurance work?

There are four main factors that affect how over 50 life insurance works.

1. Guaranteed acceptance with no medical

You can take out over 50s life cover without having a medical or answering any health questions, so you are guaranteed to be accepted. Other types of life insurance might ask you to complete a health or lifestyle questionnaire or have a medical examination.


2. Fixed monthly premium

With the majority of 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.

As 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 will 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. Fixed cash lump sum

Over 50 plans pay out a fixed cash lump sum (the ‘payout’ or ‘sum assured’) when you die, no matter how long you live. You choose what payout you would like when you take out the plan, and because the payout never changes you know exactly how much it will be when you die. It can help with your funeral planning or give you and your family peace of mind. 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 50 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 50 life insurance, you usually have to be aged 50 although some start at 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. For example, if you want a payout of £5,000 and you are 60 years old when you take out a plan, your monthly premiums will be more than if you want a payout of £5,000 and you are only 50 years old when you take out the plan.

Over 50 Life Insurance Guide download

If you prefer, you can download a PDF version of our Over 50s Life Insurance guide which has been awarded the Fairer Finance Clear & Simple Mark. This mark of excellence is only given to companies that communicate clearly with their customers.

grandparent and grandchildren working in the kitchen

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

  • Guaranteed acceptance - unlike traditional life insurance policies, you won’t need to answer any health questions or pass a medical.
  • Guaranteed fixed cash payout – when you take out your plan, you’ll know exactly how much money will be paid out to your family when you die.
  • Fixed monthly premiums - you can choose how much you can afford to pay each month, typically this amount never changes unless you agree otherwise.
  • Whole of life cover - you will be covered for the rest of your life until you die.
  • Easy claims process - making a claim is simple and quick so your family will get the money within days.
  • Spend as you wish - you can leave your loved ones a cash lump sum for them to spend how they wish. Providers won’t ask questions or put any restrictions on their spending.

Cons

  1. 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.
  2. 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.
  3. 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.
  4. 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 the cash payout if you live more than 25 years.

Frequently asked questions

Q: Why do people choose to take out over 50 life insurance?

A: By the time people reach their 50s, it’s possible that their insurance needs may have changed. While providing for their family might have been their priority before, for someone over 50, funeral costs, or leaving a financial gift for a loved one may take precedence.

Here are some top reasons as to why people choose to take out an over 50s plan:

  1. To leave money as a nest egg for loved ones
  2. To contribute towards the cost of a funeral
  3. To leave money to help settle unpaid household bills
  4. To leave a donation for a favourite charity

Q: Are over 50 plans worth it?

A: Whether over 50s life insurance is worth buying will depend on your circumstances and your reasons for thinking about buying insurance.

Over 50 plans offer a guaranteed payout without having to answer medical questions. But there can be downsides, for example, if you live long enough you could pay in more than is paid out.

Start by asking yourself these questions.

  1. Do you already own a pre-paid funeral plan with a reputable funeral director or insurer? If so then it is worth checking whether it covers any extras you may want at your funeral such as flowers or a wake – an over 50s plan payout could be used to pay for these.
  2. Do you already have money put aside to help pay for your funeral that your family can access quickly? If your family can’t access the funds quickly then they might end up having to initially pay for the funeral themselves – would they have the funds?
  3. If you haven’t already put money aside for your funeral do you know how much a funeral costs in your area? You might be surprised to hear that the average cost of a funeral is now £4,417. We use the costs of both burial and cremation from across the UK to calculate this figure in our Cost of Dying report.

Q: How can I ensure my family get the money when I die?

A: The only way to be sure the right person gets your money when you die is to make a Will.

Always make sure you use a solicitor or professional Will writer as a Will is a legal document and needs to be signed and executed correctly in order to be valid.

If you have an Over 50s plan, then you can include details of this in your Will with an explanation of how you want the payout from it to be used.

The person making the claim will usually need to do the following:

  • Confirm that the death has been registered and the death certificate has been received
  • Provide the death certificate entry number and registration district
  • Confirm that the death occurred on the UK mainland

Making a claim for an over 50s plan is usually simple but will differ by provider. It’s worth checking what the claims process is for individual providers when comparing life insurance.

Q: What is the best over 50s life insurance?

A: If you’ve decided over 50 life insurance is the right choice for you, you’ll probably want to compare the plans available.

Most over 50 insurance plans have similar product features, but there are some key differences that will determine what the best plan is for you. Key differences to look out for and compare are:

  • Is the insurer a name that you know and trust? There are lots of companies selling over 50 plans but there are only a few trusted brands that have stood the test of time. Look for a brand with a good service record, check their reviews on independent review sites such as TrustPilot, Feefo or Fairer Finance.
  • The cash payout for your age and premium will differ by provider.
  • Some insurers will offer different rates for smokers and non-smokers - make sure you check the criteria carefully as it could affect your payout in the future if you answer incorrectly – always be truthful on your application.
  • You will typically have to wait at least one year before your over 50 life insurance will payout the full sum assured on death. But some plans require you to wait two or even three years before they payout.
  • Most providers will offer the option of reducing your monthly premiums and some offer an option to stop paying your monthly premiums at a certain age or once you have paid for a certain number of years. Every provider’s offering is slightly different so make sure you check the detailed terms and conditions before you buy.

You might also want to find out how quick and easy claims process is. When you pass away, it might be important that your family get the payout quickly.

Some providers also offer a welcome gift with your plan, to say ‘thank you’ for choosing them. Whilst these can vary in value considerably, always make sure you are choosing a provider that best suits your needs and not for welcome gift alone.

Q: What are the alternatives to over 50 life insurance?

A: Over 50 life cover is not the only way to help with funeral costs or to settle any unpaid expenses you leave behind. Here’s some of the alternatives you could consider:

Funeral plans, a savings pot and over 50 life insurance are all ways to offer financial protection to loved ones. Let’s look at some of the key differences between them.

Funeral plans are designed to help with your funeral arrangements, and the payout must go to the funeral director.

Setting aside savings is a way to protect your family from funeral costs when you die. However, saving regularly over a long time will require a lot of discipline and ideally you won’t dip into your funeral savings pot - which can be difficult to resist.

A Public Health Funeral, also known as a paupers’ funeral, is arranged by a local council as a last resort for someone who has died alone, without any relatives and with no means to pay for a funeral. They are a no-frills service and you cannot make any choices towards what takes place.

Q: What are the differences between over 50s life insurance and funeral plans?

A: Funeral plans and over 50 life insurance are both ways of covering all or some of your funeral costs.

Over 50s Life cover typically pays out a fixed amount of money when you die. This money could be used to help pay for your funeral or it could be used to pay other bills or left to a friend or loved one.

An insured funeral plan helps specifically with your funeral arrangements when you die and covers the cost of your chosen funeral services. The payout from a funeral plan must go to the funeral director to pay for your funeral.

There are also trust based funeral plans where you simply pay in advance for your funeral, whether in one lump sum or in instalments. This kind of funeral plan will cover the funeral costs agreed with the funeral plan provider.

Q: What is term life insurance?

A: Term life insurance provides cover for a set number of years (the ‘term’) and pays out if you die during this time. This type of life insurance is ‘underwritten’ so your eligibility, premium and cash payout is based on your personal circumstances e.g. your lifestyle and yours and your families’ medical conditions and history.

With this type of life insurance, the payout will normally be bigger than for over 50s cover or a funeral plan. However, term insurance only covers you for a set period of time ‘just in case’ the worst should happen. You could live longer than the period of cover and so won’t get a payout (unlike over 50 life insurance where the payout is guaranteed).

Ultimately, only you can decide what’s right for you and your family. Each of these life cover options can give you peace of mind that your family will be looked after when you’re gone.

There a variety of options available and you might want to seek financial advice to see what might be best for your circumstances.

Money Advice Service there are a variety of options available and you should seek financial advice to see what might be best for your circumstances.

happy couple smiling in the countryside

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 certain number of ‘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 including 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 never change.


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 and 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.

Source: National Statistics website (as at February 2020) Crown copywrite material is reproduced with the permission of the Controller of HMSO


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 - your health is irrelevant. 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

Also called ‘the monthly payments’, your premium is the amount of money you must pay every month.


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 trust is 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

information icon The information in this article is provided for general guidance only and is not offering financial advice.

Here’s some ways you can seek unbiased financial advice.

Find out more about this type of life cover, how much it could cost and why SunLife’s Guaranteed Over 50 is the most popular over 50 plan.*

Find out more

*Most Trusted/UK's Favourite - Source: Association British Insurers statistics.