What is life insurance for over 50s?
Just as the name suggests, you need to be at least 50 years of age when you arrange the cover. Unlike term life insurance, though, it pays out the assured cash benefit whenever you die (and not just whether you die within a pre-determined “term”).
You enter a commitment to pay a fixed monthly premium for the rest of your life (currently we have life insurance over 50 from as little as £3.90 a month) – although, many insurers, waive the need to pay those premiums once you reach the age of, say, 90.
Unlike some other forms of life insurance, your acceptance is guaranteed, without the need for a medical. That could make it a viable option if you have been refused life insurance elsewhere or you have a pre-existing medical condition which may prevent you form getting cover or prove too costly.
But is it worth it?
Firstly, if you are in good health and are happy to answer a medical questionnaire, then you could get up to 40% more life insurance cover for the same monthly premium, with a traditional plan.
Secondly, in recent years, over 50s life insurance has come in for a certain amount of criticism from the media, questioning whether the benefits are worth the premiums you have to pay.
But the financial climate has changed – and may change still further during the coming years. One of the most notable consequences of the UK’s Brexit vote, for example, has been the risk of further economic recession and a response by the Bank of England to drastically slash interest rates.
As the Independent newspaper reported on the 4thof August 2016, this has the more or less immediate effect of reducing still further the already very low rate of return on savings.
Assessing the value of over 50s life insurance
This development might significantly affect the way you view the financial sense of life insurance for the over 50s. With such a poor return on your savings, it could be more attractive to put a little money away each month in the form of premiums on such a policy. Then, when you die, the insurance pays out the same guaranteed sum – however low interest rates on savings may have fallen.
This may help to counter-balance some of the conventional warnings often given about this type of insurance, namely that:
- the assured sum ultimately paid out may be less, in real terms, than you had planned when taking out the policy – but with both inflation and the return on savings so low, the preserved value of your life insurance policy could seem more attractive; and
- depending on the age at which you die, you may have paid more in premiums than the policy ultimately pays out – this may be a small price to pay, however, for living to such a ripe old age.
To clinch the value of an over 50s life insurance policy, you might look no further than the opportunity it offers for leaving a financial settlement for your heirs and family. This might be used to pay for or help pay for your funeral expenses, and it might even be used to help manage the inheritance tax liabilities of the estate you leave.