Life Insurance Over 50
Fifty is the age at which people start being advertised a particular kind of insurance, and it is rarely the one that suits them.
Guaranteed-acceptance over-50s plans are heavily marketed because they are easy to sell: no health questions, acceptance for everyone, a modest fixed payout. What is less prominent is that paying premiums for long enough can exceed the sum assured, and that most people in reasonable health could have bought considerably more cover for the money.
So the first question is not which over-50s plan. It is whether you need an over-50s plan at all.
The short answer
Most people over 50 in reasonable health can still buy ordinary underwritten life cover, and it is usually far better value than the guaranteed-acceptance plans advertised to this age group. Those plans ask no health questions, which sounds helpful and means everybody is priced as though they might claim soon. The question worth asking is what the cover is actually for now, because it is rarely the mortgage.
What this changes
- The mortgage may be nearly or completely repaid, so cover arranged for it is doing less
- Children are often independent or close to it, which shortens the period anyone depends on you
- Inheritance tax starts to be a real consideration for some estates
- Health conditions become more common, which affects both price and availability
- Existing cover may be approaching the end of its term, often without anyone noticing
- Funeral costs and leaving something behind become more prominent reasons for cover
The bit people miss
The commonest mistake at this age is assuming ordinary life insurance is no longer available and going straight to a guaranteed-acceptance plan. For somebody in reasonable health, standard underwritten cover is usually both available and much better value, and a condition does not automatically rule it out: plenty of insurers will cover well-managed conditions on normal or slightly loaded terms. It is worth finding out before settling for a plan that asks nothing because it assumes the worst.
Guaranteed Acceptance Costs You The Health Questions
No health questions sounds like an advantage and it is the reason these plans are expensive.
An insurer that cannot ask about your health has to price for the possibility that you are seriously unwell. Everybody pays that price, including people who are perfectly fit and would have been offered standard terms. The sums assured are usually modest, there is normally a period at the start during which only premiums are returned, and because the premiums continue for life it is possible to pay in more than the policy will pay out.
None of that makes them useless. For somebody who genuinely cannot get underwritten cover they are a sensible way to leave something for a funeral. The mistake is going there first rather than finding out what you could actually get.
What Is The Cover Actually For Now
Protection in your twenties answers an obvious question. At fifty it is worth asking the question again rather than renewing out of habit.
If the mortgage is nearly gone and the children are independent, replacing income for dependants may no longer be the point. What often replaces it is one of three things: leaving a specific sum to somebody, covering a funeral so the family does not have to find the money, or dealing with an inheritance tax liability on an estate that has grown.
Those three want different products. The first two can be met with a modest whole-of-life policy; the third usually needs a larger one written in trust, and is worth getting proper advice on alongside your accountant. Buying before deciding which it is tends to produce the wrong shape.
What usually fits, and why
Usually the better value option if your health allows it, with a sum assured you choose rather than one dictated by a plan.
Where the purpose is leaving something behind or meeting an inheritance tax bill rather than covering a term with a known end.
Still relevant while you are working, and the years before retirement are when a long illness does the most damage to a pension.
Common questions
Can I still get life insurance over 50?+
Usually yes. Ordinary underwritten life cover is available well beyond 50 for people in reasonable health, and a managed condition does not automatically rule it out: plenty of insurers will offer normal or slightly loaded terms. It is worth finding out what you could actually get before settling for a plan that asks no questions.
Are over-50s plans worth it?+
They suit somebody who genuinely cannot get underwritten cover and want to leave something for a funeral. For most people in reasonable health they are poor value, because an insurer that cannot ask about your health prices everybody for the possibility that they are seriously ill. Premiums also continue for life, so it is possible to pay in more than the policy pays out.
My mortgage is nearly paid off. Do I still need cover?+
It depends what it would now be for. If nobody depends on your income, replacing it may no longer be the point. What usually replaces that purpose is leaving a specific sum to somebody, covering a funeral so the family does not have to find the money, or meeting an inheritance tax liability. Those want different products, so it is worth deciding which applies first.
What happens when my existing policy ends?+
It simply stops, and a surprising number of people do not notice until it has. Term assurance runs for a fixed period and pays nothing at the end. If your term is approaching, it is worth looking at options now rather than after it lapses, because arranging new cover gets harder and more expensive with each year and each new entry in your medical records.
Is income protection still worth having at this age?+
While you are working, yes, and arguably more than earlier. A long illness in the years before retirement does lasting damage to pension contributions at exactly the point they matter most, and recovery to full earnings takes longer. Cover is more expensive at this age, so the deferred period and benefit level are worth setting carefully.
Cover that often goes with this
The gaps we most often find sitting next to this one.
- Life coverTerm and whole of life compared.
- Cover for funeral costsWhere that is the actual purpose.
- Reviewing cover you already haveCheck when your current term ends.
- If you are caring for a parentThe other thing that often starts in your fifties.
- Talk to an adviserFind out what underwritten cover you could get first.