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.
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.
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.
The amount of protection (in reality, the money) your Over 50s life insurance will provide when you die. See also Sum assured.
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.
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.
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
The named person on whose death the policy will pay out.
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.
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.
The contract between the insurance provider and the person taking out the insurance. See Policyholder.
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.
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.
Also called ‘the monthly payments’, your premium is the amount of money you must pay every month.
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.
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.