Guide
Over 50s life insurance explained
In this guide we explain what over 50s life insurance is, how it works, how much it costs and whether it’s worth taking out cover.
We also look at traditional life insurances that are available to over 50s and what you should consider when taking out life insurance over 50.
What is over 50s life insurance?
Over 50s life insurance pays out a lump sum of money to your loved ones when you die. This type of plan is usually only available to people aged 50-80. You pay a fixed premium each month and the policy guarantees to payout when you die.
Your loved ones can use this money as they wish. But, people often get this type of insurance to help with funeral costs or to leave a small legacy for their family.
Being over 50 doesn’t mean that you can only take out over 50s life insurance. You can also take out traditional life insurance for people aged over 50, such as term insurance or whole of life insurance.
In this guide, we look at over 50s life insurance, compared to taking out traditional life insurance when you are aged over 50.
How does over 50s life insurance work?
When you take out your over 50s life insurance plan, you can decide how much to pay in premiums each month. Or, you can decide how much to leave to your loved ones when you die.
For example, you can choose to pay £20 each month in premiums. The insurance company will tell you how much you can expect as a payout. Or, you can choose to leave £10,000 to your loved ones. The insurance company will tell you the monthly cost.
This is different to a traditional life insurance policy where you usually choose the amount you want as a payout. The insurance company will tell you how much it costs.
Most traditional life insurance covers you for your whole life. It guarantees a payout to your loved ones when you die. If you choose a plan that covers you for a certain time, say 10 years, and you die within that time, then your loved ones will receive the payout. If you die outside of that time limit, they won’t receive anything.
Most life insurance plans for people over 50 cover small expenses, like funeral costs. So, they have a limit on how much cover you can take. This helps keep premiums low.
How much does over 50s life insurance cost?
The cost of over 50s life insurance will depend on how much you want as a payout. It will also depend on your age when you take out the policy and whether you’ve ever smoked.
So, if you’re 55 and never smoked and you want a payout of £5,000, it will cost you less each month than someone who’s 65 and a smoker.
But, even though a traditional life insurance policy will take into account your health, it's worth getting a comparison quote. Because it’s not always cheaper to take out a over 50s life insurance plan.
The benefits of over 50s life insurance
Peace of mind
Over 50s life insurance is ideal if you want to make sure you leave a small amount of money for your funeral or to pay off debts. When you die, your family won’t need to cover these expenses for you.
No medical questions and guaranteed acceptance
Unlike term or whole of life insurance, some over 50s life insurance providers won’t ask questions about your health. This means you’re more likely to be accepted even if you have a serious medical condition.
Fixed premiums
Your insurance provider will tell you how much you’ll pay each month or year. This amount usually stays the same throughout the plan. You can be sure your premiums won't get more expensive as you age.
Simple claims process
Once a claim has been approved, most insurers pay out very quickly, often within days.
Over 50s life insurance – things to consider
Keeping up payments
You must make payments every month for the rest of your life to make sure your loved ones receive a payout when you die. If you stop making payments, your insurance may end, and your family won’t receive any payout.
Some providers cap payments at a certain age or after a set number of years, but they allow your cover to continue until you die.
No immediate cover
Many insurance companies will only pay out on an over 50s plan if the policy has been in place for at least a year.
Some over 50s life insurance plans say that if you die within the first year of the plan, you will get back the premiums you’ve paid. But often, you won’t receive the full insurance amount. Others offer immediate full insurance cover for accidental death.
Pay in more than the payout
It’s possible to pay in more to your policy than you receive as a payout if you live for a long time. The longer you live, the more you pay in, but the payout remains the same.
Inflation
As the insurance payout is a fixed amount, inflation will eat into the value of what you leave behind. Inflation is the increasing costs of goods and services, and as it goes up, things cost more. If you have a fixed amount of money, this means your money will buy less as goods and services get more expensive.
What is the best type of life insurance for someone over 50?
There are several types of life insurance available and you can apply for them all if you’re over 50. The best type of life insurance for you depends on what your needs are. Here we explain the differences between types of life insurance for over 50s.
Whole of life insurance
Whole of life insurance lasts your whole life so your family get a guaranteed lump sum when you die. The policy only ends when you die. So, the monthly premiums are often higher than term life insurance.
When you set up the plan you decide how much you want to leave your loved ones. People often use these plans to leave a lump sum to pay an inheritance tax bill. Or, if you want to leave money for your family.
Term life insurance
Term life insurance pays out a one-off lump sum if you become ill or die during the policy’s term. You decide how long you need the policy to last – anything from five to 70 years.
You or your family can use the payout for anything. But, people often use these policies to pay off a mortgage and other debts. This way, your family isn't left with the worry of paying bills.
Even if you don't die, but are diagnosed with a terminal illness, you can make a claim. You will receive a payout to help you during your illness.
Over 50s life insurance
Over 50s life insurance is usually designed to provide a small sum of money to be paid out when you die. The sum is less than you would usually receive for term and whole of life insurance.
As the payout is smaller, the premiums tend to be more affordable. But, you may end up paying more into the plan than your family receive when you die if you live into your 80s.
Is life insurance over 50 worth it?
Life insurance is a valuable tool that allows you to leave a lump sum of tax free cash for your loved ones. The older you get, the more it costs. But, term insurance and whole of life insurance are a good way to leave large sums of money. This is especially true if you lack savings to cover costs such as paying off a mortgage.
Over 50s life insurance is a bit different to term insurance and whole of life insurance. It’s usually designed to provide your loved ones with a smaller sum to cover funeral expenses or small debts. Or simply to leave a nest egg for your family. Because the payouts are smaller, it can be cheaper than other life policies.
So, it really depends on what you expect the payout to be used for when you die. You can get term life insurance and whole life insurance if you're over 50. Also, there's over 50 life insurance. So, look at all your options. Make sure the policy you take out meets your needs.
Vitality life insurance for over 50s
Want to know more about life insurance when you are aged over 50. Thinking about taking out a policy? At Vitality, we offer life insurance policies for all age groups. Here are some of the benefits of taking out life insurance with Vitality:
- A brand you can trust - In 2023, we paid out 99.7% of life insurance claims.*
- Get a discount on your monthly premiums when you add Optimiser to your plan. Receive up to 30% off when you choose term life insurance, and up 40% off when you choose whole of life insurance.
- Access to Vitality partner discounts and rewards.
- Get free no-obligation advice. Our advisers offer expert advice to help you make the right decisions.
Published: 13 June 2024
*Vitality Claims and Benefits Report, 2024
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