Over 50s Life Insurance – A Simple Guide
Key things you need to know about Over 50s Life Insurance Plans
Guaranteed Acceptance – No medical or health questions
Basically with these plans they don’t ask you any health questions, some don’t even ask if you smoke or not. As a result if you make an application for one of these plans you are guaranteed to be accepted whatever your state of health.
If you are healthy and willing to answer a few questions about your health then you could get much more cover for the same monthly premium. This kind of life insurance is called Term Life Insurance.
If you are not in the best of health or have a significant pre-existing health condition then a policy with Guaranteed Acceptance may be your best option for Life Cover.
Fixed Monthly Payments
Premiums start from under £4 per month and go up to as much as £100. Your monthly payment stays the same throughout the plan. So, if you start a plan for say £10 per month and are still alive after 10 years you will still be paying just £10 per month.
The downside of having fixed premiums is that generally the amount of Life Insurance that these plans pay out is fixed too. We all know that the prices of things we buy go up over time. This means that when these policies pay out the amount you can buy with the pay out will be less than it was when you to took out the plan.
Lowest Premiums Don’t Necessarily Mean Best Value
Low premiums will help ensure that they are affordable but remember a low starting premium does not mean the plan is the best value. Always shop around for the best sum assured for the premium.
Cheaper For Non-Smokers
If you are a non-smoker then it will be worth looking for a policy that will reward you for this – Legal & General and Royal London both do. Equally if you are a smoker then it is worth looking for a policy that doesn’t differentiate between smokers and non-smokers as you will likely get more for your money – British Seniors for example.
You usually have to pay premiums for between 1 and 2 years before you are fully insured under these over 50 plans – the period you have to wait is called the Moratorium.
Because the insurers don’t ask you any health questions they make you wait for a while before your full insurance cover kicks in – they do this to try and stop people that are already very sick or perhaps even have a terminal illness from taking up cover. This waiting period could be up to 2 years but most providers these days pay out the full sum insured after just 12 months.
If you were to die during this wait period then insurers will typically either refund the premiums you have paid, some may even double the amount of premiums. What this means is that even if you are ill already, provided you can afford the premiums, then it may be worthwhile considering taking out a Guaranteed Over 50 Plan.
Payments For Life or Until Your 90
If you live a long life then these plans require you to keep paying until you are at least 90 – some of them make you continue to pay until you die.
As a result it is possible to pay in more in premiums than the insurer pays out when you die. Anyone that sells you Over 50s Life Insurance Plan must tell you how many years you would be paying in before your premiums paid exceeded your payout.
How much you are worried about this possibility will depend on how long you think you might live. Right now only 1 in every 100 people live past 90 years old. If you think you might be one of the lucky ones then make sure you pick a policy where you stop paying at 90. Both Legal and General and Royal London offer plans where you stop paying at 90.
A Free Gift
Some of these policies offer a free gift when you take out the plan. Most people that buy these policies do so to protect their loved ones from the expense of their funeral so they never benefit directly from the pay out – the free gift is at least something that you get to enjoy.
Gifts are typically vouchers to spend online or at major high street stores. They vary in value considerably from insurer to insurer and from offer to offer – but don’t be swayed by the gift – the important thing to look at is the features of the policy, premium, amount of cover, moratorium and when your payments stop.
If you are thinking of buying an Over 50s Life Insurance Plan then you can expect a voucher of between £75 and £125 for taking out a plan.
Cancelling Your Over 50s Life Insurance Plan
These plans are intended to be a life long commitment, what this means is that they typically have no early cash in value. So, if you stop paying you will get nothing back and you will get nothing back if you die.
Most providers offer the ability to lower your monthly premiums but this is generally a one way offer, once reduced they cannot then be increased again on that policy. By reducing your premiums you will also be reducing the value of the payout when you die so this decision is not one to rush into. Many providers will offer options to defer payments or provide a payment holiday without cancelling your policy – this may be a better option for you – it does mean that you have to bring payment back up to date to continue cover but will help you overcome short periods where cash may be tight. SunLife is a good example here, giving you 6 months to bring your policy back up to date and continue cover as if nothing had happened.
If you have been paying your premiums for a long time then there are some companies that will offer the ability to stop paying further premiums and still have a reduced sum paid out on your death. Royal London provide a generous offer here once you are more than half way through your policy payments.
Which Is The Best Over 50s Life Insurance Plan ?
Choosing the best Over 50 Life Insurance Plan for you can be daunting as there are lots of different insurance companies out there that do Over 50 Plans all with different product features and benefits. The key is that you shop around. Check which company gives you the most sum assured for your premium and that when you select a plan that you make sure that it is affordable and will stay that way – remember with lots of these plans if you stop paying then you get nothing back.
The Big Names In Over 50s Life Insurance
SunLife – are the biggest over 50s life insurance brand in the UK selling over more policies than all the other life insurance providers put together ! They guarantee to pay every claim and have the lowest starting premiums of all the providers.
Legal & General – another big insurance brand with a well featured product and keen pricing. They offer non-smoker rates.
Royal London – a largely unknown brand until they started putting those crazy medieval adverts of TV. They offer a well featured product with a unique feature that lets you stop paying in once you are half way through your policy payments. A great feature if you run in to money troubles but reduces the payout if you opt for it. Like Legal and General Royal London offer non-smoker rates.
British Seniors – oddly named given they are an Aussie business selling an American insurance companies product ! So if you can get past the slightly disingenuous brand name then the product is well featured. It has an odd Cash In feature that allows you to get some money back after you have made a certain number of years payments – not a decision to take lightly and one you will likely end up out of pocket if you take so certainly not a reason to buy from British Seniors.
Shepherds Friendly – as the name says this is a friendly or mutual society, run for the benefit of its members. A well featured product with access to bereavement services to help guide you through some of the practical tasks that need to be done after someone dies.
Checklist Before You Buy An Over 50s Life Insurance Policy
Our suggested checklist before you buy any over 50 life insurance plan :
- Only buy policy with a big brand insurer, if you’ve never heard of them then don’t buy from them
- Ask for non-smoker cover if you are a non-smoker, they are likely to be much better. If you’re a smoker then check you will probably be better off going somewhere where they don’t ask if you smoke or not
- Make sure that you payments stop after your 90 even if you think you won’t reach that age if you are the 1 in every 100 that reach 90 you will be glad you did
- Make sure you compare levels of cover and premiums – shop around but don’t just choose on price as often the differences can be small and you may feel more comfortable paying a little more for a better known brand or service
- Don’t buy for a comparison service without checking out products and prices from some of the big brands that don’t sell via comparison services like SunLife and Direct Line.
- Ask about how easy the claims process is and the percentage of claims paid out, you should expect payouts on death within 5 working days of notification as a minimum and accept nothing less than a 100% payout – these products are guaranteed acceptance with no medical questions so there can’t be any excuses for not paying out.
Good luck with your search.