Over 50s Life Cover
If you were to pass away and sadly leave family members behind who may be reliant on you, how would they cope, not only emotionally, but financially too?
- Could your family afford to pay the mortgage and ongoing bills?
- Is there enough money to cover your children’s ongoing costs?
If the answer is no then you are an ideal candidate to warrant applying for a life insurance plan.
There are four categories of life insurance plans that you are able choose from, these are;
- A level term policy, which means that the sum assured remains the same and will not change throughout the term of the plan
- A decreasing term policy where the sum assured will decrease throughout the term of the plan. This product is generally associated with a mortgage
- An increasing term policy where the sum assured increases in line with the Retail Price Index (RPI)
- The family income benefit plan which will provide a monthly pay-out, covering the cost of your circumstances
Your individual circumstances will determine which plan will be the most appropriate policy for you. Please speak to a Proadvice financial adviser today.
Can I get Life Cover if I am over 50?
If you are over the age of 50, you are still eligible for life insurance, critical illness and income protection insurance. The same rules apply whether you are 18 years old or 50 years old. There is however a plan designed specifically for the over 50’s which is a ‘whole of life’ insurance plan that asks no questions or requires disclosure of any previous medical conditions. The provider will guarantee to accept everyone over the age of 50 and are specifically designed for the people who do not want to answer any medical questions on an application or have a medical history which could potentially result in them having been turned down for a life insurance policy elsewhere, yet as there are no medical questions these plans are often expensive and do still have restrictions, typically these restrictions are;
- If you default on paying your premiums your life insurance cover will end
- Your plan will have no cash in value
- You will have no life insurance cover within the first 2 years, unless your death is accidental
- The final amount payable upon death is likely to reduce in value due to the effects of inflation
- Your benefactors may get back less than you have paid into the policy
If you are concerned that you have or may have had a medical condition that could prevent you from getting life insurance, it is worth speaking to a Proadvice adviser to discuss this and see what your options are and what potential impact it could have on your premium. Many common medical conditions like blood pressure, high cholesterol, stress or depression are well known by Life insurance providers and may still prove to be a feasible option before applying for an over 50’s plan. You may be subject to a ‘loading,’ (increase in premium), yet it may still work out to be better value for money. The over 50’s plan is a good back up if you struggle or fail to get insurance elsewhere. Your beneficiaries may get back less than you have paid into the policy.
The term of the plan
The longer you have your insurance for, the bigger the risk you are to your insurance provider and therefore your premiums will be more expensive. Statistically you are more likely to claim on a life insurance plan at the age of 60 than you are at the age of 18. We often advise our clients to have a term that suits their circumstances and budget now and to look to review the policy in the future. It may work out that you pay more in 20 years time however you could offset the costs in the money you are currently saving.
The type of term plan you take out will also have an impact on the premium cost. Decreasing plans are always cheaper than increasing plans and family income benefit plans are cheaper than level term plans. There is logic in why an insurance company might do this as, as the risk increases (ie, you get older), the sum assured gets lower therefore the insurance provider can make the premiums cheaper at the start.
A guaranteed premium is the more costly than a policy with reviewable premiums. By taking out a guaranteed premium you will have to pay extra for that peace of mind that your premiums will never increase.
A way of lowering the cost and saving money on your policy is to go for a reviewable premium. A reviewable premium is cheaper initially but could change as time goes by. A benefit of opting for reviewable premiums is that if your circumstances are likely to change in perhaps the next 5 years, re-mortgage, plan to move or have a child for example, why pay more upfront if you are going to be required to reapply for your life cover in the future.
With reviewable premiums, it is not guaranteed that the cost will increase; there is also a chance that the reviewable premiums could go down in cost at your review date. Not only will you have saved money upfront, your premiums may go down in the future too but of course there is an element of risk in the fact that it can go either way. The premium type you select is similar to choosing your mortgage type and whether you want to pay more upfront for a fixed mortgage or less for a variable rate.
The Sum Assured
The amount of insurance that you want to be covered for, referred to in insurance terms as the ‘sum assured’ can also change. If you were to select a large sum assured this will make your premiums more expensive. It is not recommended to take out a substantial amount of life insurance cover if it is going to become unaffordable in the future. If you end up in a position where have to cancel the plan not only will you lose the life insurance cover but also all of the money you have invested in that policy to date. It is advisable to opt for a realistic amount where you are sure that the premiums can be maintained, for example, it would be much more sensible for you to take out a policy for £250,000 and afford to keep up the payments than take out £1,000,000 worth of cover and have to cancel it part way through.