Life insurance for over 50s is regularly advertised on TV as a way to provide a lump sum for loved ones when you die, which can be used to help pay for your funeral costs, or just as a cash gift.

Here, we explain how over 50s life insurance cover works, what makes it different to other types of life insurance, and some of the pros and cons to watch out for.

How does life insurance for over 50s work?

As its name suggests, life insurance for over 50s is only for people aged 50 or over. Like standard life cover, you pay a premium each month, and the policy will pay out a lump sum when you die. This type of life insurance doesn’t have a set term, so you’ll usually pay premiums until your death.

Unlike other types of life insurance, you won’t be asked for your medical history when you apply for over 50s cover, so you’re guaranteed to be accepted. You’re also guaranteed a payout, as the policy lasts until you die.

The maximum payout from over 50s life insurance is usually pretty low, typically around £3,000.

Advantages of over 50s life insurance cover

This type of cover can be useful for those who are turned down for other types of life insurance due to health conditions, or because of their lifestyle. There’s no need to provide any details of your medical history, which means you’ll be accepted even if you’re in poor health.

If you die relatively soon after taking out a policy, then your loved ones should end up with a lump sum that is worth much more than the premiums you’ve paid in.

Another advantage is that the policy will pay out a fixed lump sum when you die. Even though this payout will usually be a relatively low amount, at least you can be certain that it won’t change, and there’s no investment risk involved.

Downsides of life insurance for over 50s

There’s a risk that if you take out life insurance cover when you’re in your early 50s and live until you’re 80 or older, the chances are you’ll end up paying far more in premiums than the policy will ever pay out. You have to continue paying premiums for life, which is a big financial commitment if you live for several decades after taking out your policy. If you stop paying premiums for any reason, you won’t be entitled to get any of your money back.

As the maximum payout from an over 50s life insurance policy is usually around £3,000, this is unlikely to be enough to provide financial security for your loved ones when you die.

It’s also important to note that if you die in the first year after taking out cover, perhaps because you develop a terminal illness, you’ll often only get a refund of the premiums you’ve paid so far, rather than the lump sum payout. If you die in an accident, however, policies will usually pay out in full.

Who needs over 50s life insurance cover?

Over 50s life insurance cover may be right for you if you have any health issues which would make premiums for standard life insurance unaffordable. It can also be worth considering if you want a policy for a specific purpose, for example to cover funeral costs, and don’t necessarily need an especially big lump sum payout.

What to watch out for

As with any type of insurance, it’s vital to read the small print before buying so that you’re clear on exactly what your policy will and won’t cover.

For example, most policies require you to continue paying premiums for the rest of your life, but some say you can stop once you’ve reached the age of 90.

You should also check whether any policy you’re considering buying has a payout that will keep pace with inflation, or rising living costs. If it does, then your premiums will usually rise in line with inflation too. If it doesn’t, then the payout you’ll get on death might not look quite as generous as it does now a couple of decades on.

As previously mentioned, there’s also usually a ‘qualification period’ which typically lasts for one or two years, and means that if you die during this time, your beneficiaries will only get the premiums you’ve paid back rather than a full payout.

How much does over 50s life insurance cost?

The cost of over 50s life insurance depends on a range of factors, including your age, whether or not you’re a smoker, and how much cover you want. It’s best to speak to an insurance broker to find out how much a policy may cost you considering your particular circumstances.

If you’re over 50, the cost of cover starts from around £5 a month, and it’s important to weigh up if this is worth paying over the years, with the maximum payout for this age group typically at around £3,000.

Alternatives to life insurance for over-50s

Even though interest rates are currently very low, you might decide that you’ll be better off paying money into a savings account each month rather than paying monthly premiums for over 50s life insurance. That way you know that your loved ones will get back all the money you’ve paid in, plus extra interest, however long you live for. 

It’s also worth noting that there are several other different types of life insurance available, so it’s a good idea to explore all the various options and how much they are likely to cost you before deciding which kind to go for.

For example, you might want to consider term life insurance, which, in return for you paying monthly premiums, provides you with life cover for a set period of time, or ‘term’. Monthly premiums will be higher the older you are.

Alternatively, you could consider whole of life cover, which is designed to protect you for your whole life, so you’re guaranteed to receive a payout. As a result, this type of policy is much more expensive than term life insurance. Both these types of cover require you to provide details of your medical history and lifestyle.

You can find out more about the different kinds of life assurance that are available in our article Different types of life insurance explained, and why having cover is important in our guide to Why life insurance matters.

When buying any type of insurance, it’s always a good idea to shop around first, so you can be certain you’ve found the best possible deal to suit your needs. If you have any pre-existing medical conditions it can be helpful to use a fee free specialist life insurance broker to help you navigate the various acceptance criteria and find the right insurance cover for you.

There are a number of fee free brokers available in the market, but if you’re looking for somewhere to start, we’ve partnered with life insurance expert Teddy Cenaj to offer fee-free advice to our members. All you need to do is book a no-obligation call to get personalised fee-free advice and quotes from the whole market.

What needs to be done when making a life insurance claim?

When making a life insurance claim, the first thing you need to do is contact the policy provider and let them know the policyholder has passed away. You will need to provide them with the name of the policyholder and their policy number if you have it. The insurer will want to know your relationship to the policyholder, and their cause of death. They will also want to see an original death certificate.

One the insurer has all the information they need, they should then be able to process the claim. Payouts are usually made within about 5-10 days, but this will vary from provider to provider.

How to find the right over-50s life insurance

There are a number of fee free brokers available in the market, but if you’re looking for somewhere to start, you can get fee-free advice from a Rest Less life insurance expert**. All you need to do is book a no-obligation call to get personalised fee-free advice and quotes from the whole market.

Are you thinking about buying life cover, or have you recently taken out a policy? If so, we’d be interested in hearing from you. You can join the money conversation on the Rest Less Community or leave a comment below.

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