Our guides to buying life insurance over 50
Here at Insurance Magazine, you can find a series of money saving expert life insurance guide to help you get the best deal on your travel insurance. Learn how to lower your premiums with our money saving ideas and read our guides for tips on finding the right policy for your individual needs.
About over 50s life insurance
Today, many young people who are taking life insurance because the premiums are cheaper than when they are older. Life insurance also can be used to pay off a settle outstanding debts, or mortgage, when they die. You’d find the premiums much more expensive if you were to take out life insurance at 50 than if you were 30, and even, it’s likely that you’d see some restrictions on the term of your cover.
However, term life insurance isn’t best suited to everyone, for example, if you have paid off your mortgage and you’re over 50 or have children who are grown up, your needs will be exceptionally disparate to a 35-year-old who has a young family and 20 years of mortgage payments to make, so this is where life insurance over 50 comes in.
What is over-50s life insurance?
A type of life insurance for anyone aged over 50 is over-50s life insurance and it pays out a lump sum when you die, you pay for this kind of life insurance with regular monthly installments. The money could be used to pay off any existing debts, could be used towards your funeral costs or simply as a gift to leave your loved ones.
The premiums are usually fixed is another advantage of life insurance for the over-50s. This means you can choose a desired level of cover and premium that suits your budget and it will generally stay the same price. With monthly payments starting from around $10 and going up to about $50 are premiums to suit most budgets.
Over-50s life insurance many are offered by the big insurers which pays out a cash sum when you die. The acceptance is guaranteed is the big advantage of an over-50s policy. You don’t have to pass any medical test or answer any health questions.
This means you will not be turned down if you’re between the ages of 50 and 80, or sometimes 85 depending on the policy.
The maximum typically being around $25,000 and the majority of over-50s life insurance policies pay out a fixed amount. The certainty it offers is the great thing about a fixed payout, but there are downsides too.
But you can’t miss a payment
You must keep up the monthly payments when you take out over-50s life insurance, otherwise, your cover will lapse. This means you’ll no longer be covered if you miss a payment and and you won’t get any of the money back that you’ve paid in.
Inflation may erode your life insurance payout
That the amount could potentially be eroded by inflation is the other disadvantage of a fixed payout. When you sign up for the policy, the lump sum may seem a lot, but will it still have the same financial significance 20 or 30 years down the line?
You could pay in more than you’ll receive
Than you receive, it’s possible that you may pay more into your policy. If you live past 83, you’d have paid more in than you could receive, for example, you paid $25 a month for $10,000 of cover if you took out an over-50s life insurance policy.
Increasing life insurance
Increasing life insurance for over-50s many are offered by a few insurers, where the premiums, and the sum insured, are reviewed every year in line with inflation so have holds its value over time for this type of life insurance. But, there is added risk i.e. the cover will lapse if you can’t keep up with the increased payments over the years.
As you could potentially be paying out for more than 30 years then when deciding on a premium, it’s important to think carefully about your budget. But, if you live over a certain age (usually 90) most insurers offer free cover. This would mean you can stop paying your premiums when you get to that age but your policy would remain in force.
Up to one or two years before you can expect the full payout, insurers almost always insist that you have paid into an over-50s life plan for a minimum period. Your beneficiaries will typically receive a sum equivalent to the premiums you have paid up to that point, if you die before the minimum period. Even, you would normally receive the payout in full if you die as a result of an accident in the early stages of the plan.
A significant source of stress for the bereaved is funeral expenses so some people want to make sure the cost of their funeral is covered when the time eventually comes. You may want to look into your potential insurer’s funeral benefits options if this is a particular concern of yours.
Funeral benefits could involve a discount from a funeral company, or a bigger payout. Important to check the details as every policy will differ, however, a good example of a funeral benefit is a $250 discount on the funeral, or an extra 10% of your payout.
Writing the policy ‘in trust’
Your beneficiaries could be liable for inheritance tax at 40% on the proceeds of your life policy, but money received from life insurance policies don’t usually attract capital gains tax or income tax. Than you intended, this would mean the amount awarded would be significantly less.
You can write your policy ‘in trust’ to sidestep inheritance tax, so so you should ask your financial adviser or insurer about how to go about this.
Life insurance for over 50 years old is not an investment plan or a savings scheme. So if you don’t keep up with the premiums it’s worthless and it has no cash-in value. It’s therefore before you sign on the dotted line, extremely important to be sure that you can cope with the financial commitment.
Find the best over-50s life insurance cover
By compare quotes is one way to find the best over-50s life insurance cover. When you run a quote, they will ask you how much cover you want or how much you want to spend. You’ll be able to review quotes after you’ve filled in some details and the process takes less than a minute.
You’ll automatically be shown the cover with the lowest premiums at the top of the list when you compare over-50s life insurance. The results table clearly shows how long you have to wait before you claim, what age you can receive free cover and how much the policy will pay out.
You can also see additional benefits offered by over-50s life insurance providers such as flexible payments, serious illness cover, or funeral benefits.