As you get older, life insurance might not be at the top of your priority list. But have you considered how your loved ones would cope financially if you’re not around?
Don’t be fooled by the many guaranteed-acceptance life insurance plans that are advertised on TV and in magazines as you could end up paying a lot more than you need to.
Do I really need life assurance?
It really depends on your personal circumstances. Life assurance can be a tax efficient way of reducing the effect of inheritance tax on your estate; if you simply want to leave money to family or make sure your funeral costs are taken care of then you might be better off investing your cash elsewhere. If you're uncertain, it may be a good idea to seek independent, impartial financial advice.
Typically, most over 50s plans are whole-of-life policies that pay out a fixed amount on death but many providers offer other features such as funeral benefit and waiver of premium, which could be useful.
How much does it cost?
The cost of life assurance is dependent on age and health; the older you are and the worse your health is, the greater the costs can be. It also depends on the length of the term and the amount of cover you want to take out. The underwriter will assess the risk on them having to pay out – smokers tend to pay more than non-smokers for example.
Will I need a medical?
Many over 50s plans do not require any medical underwriting but if you have recent history of serious illness, such as cancer or heart problems, then you could find that many insurers demand a medical assessment or refuse cover altogether.
What else do I need to know?
In most cases, you’ll be accepted for cover if you’re a UK resident aged 50 – 80. Always compare similar policies and don’t simply choose the cheapest option. Some are cheaper than others, but they might not offer the same protection.
When taking out a life insurance policy, always be aware that:
The premiums you pay could be more than amount payable when you die.
If you stop paying your premiums for any reason, or you cancel your plan early, you won't get back any premiums you've paid. Cover may cease and you might not be protected when you need it the most.
If you die in the first year of your plan, your loved ones may only get what you've paid in.