Life insurance premiums rise with age, so if you are thinking of arranging cover later in life, it’s worth considering a specialist policy for the over 50s. 

Guaranteed acceptance

Many of the big insurers offer over-50s life insurance, which pays out a cash sum when you die. The big advantage of an over-50s policy is that acceptance is guaranteed. You don’t have to answer any health questions or pass any medical test. If you are between the ages of 50 and 80 or sometimes 85, depending on the policy, the insurer will not turn you down. 

Fixed premiums

The other advantage of over-50s life insurance is that premiums are usually fixed - and start from as little as £4 a month, rising to about £100.

We want to show you as many insurers as possible, so that you can choose what suits you best. But, we can’t promise to show you every single insurer, because some insurers don’t want to be included on comparison websites.

We think a good over-50s life insurance policy should have fixed premiums, and a short minimum payment period. We also think the insurer should review your premiums and the sum insured every year, in line with inflation. We prioritise the companies that include these things in their standard policy, so they appear higher in our list. The insurers who only offer some of these things in their standard policy appear lower down in the list.

You simply choose a premium to suit your pocket and your insurance needs. For example, you might opt to pay £25 a month for a sum insured of £10,000. As long as you keep up the payments, your family will then receive £10,000 on your death. 

Free cover

It’s important to think carefully about your budget when deciding on a premium because you could be paying out for a very long time, perhaps more than 30 years. Most insurers, however, offer free life cover after a certain age, usually 90. You can therefore stop paying the premiums but the policy remains in force. 

Pay more in

You should also bear in mind that you could pay more into the policy than you get out, depending on how long you live. Let’s use our example of £25 a month for £10,000 of cover. If you took the policy out when you were 50, you would pay more in premiums than you would receive in benefit if you lived beyond the age of 83. 

Fixed payout

Most over-50s policies pay out a fixed amount, up to a typical maximum of £25,000. A fixed pay-out might offer certainty, but remember that inflation will erode its value. A lump sum of £10,000 might seem a lot now, but what will it buy after 20 or 30 years?

Increasing life insurance

A number of insurers offer increasing life insurance for the over 50s. The sum insured – and the premiums – are then reviewed every year in line with inflation. Increasing life insurance holds its value over time but you must be confident that you can keep up with the premiums, otherwise the cover will lapse.

Funeral benefits

Some people take out over-50s life insurance to clear outstanding debts on their death or simply to leave a gift to their loved ones and to help pay for their funeral costs. If you want the payout to cover the cost of your funeral, you might want to look at the insurer’s funeral benefits option. The pay-out would then go directly to a funeral company. 

You would also normally receive either a bigger pay-out or a discount on the funeral.  For example, if you arrange cover of £10,000 but opt for funeral benefits, the payout might be £10,000 plus 10%. Alternatively, the funeral company might offer a discount of £250 on the funeral. 

Minimum payments

Insurers almost always insist that you have paid into an over-50s life plan for a minimum period of up to one or two years before you can expect the full payout. If you die before then, you will typically receive a sum equivalent to the premiums paid. 

In other words, if you pay £25 a month and die after three months, you will get £75. If, however, you die as a result of an accident in the early stages of the plan, you would normally receive the payout in full. 

Financial commitment

Over-50s life insurance is not a savings scheme or investment plan. It has no cash in value, so if you don’t keep up with the premiums it is worthless. You must therefore be sure that you can cope with the financial commitment before you sign on the dotted line. 

Writing the policy ‘in trust’

It’s also a good idea to write your life policy ‘in trust’. Life insurance does not usually attract income or capital gains tax, but your family could be liable for inheritance tax (IHT) at 40% on the proceeds of any life policy. You can sidestep IHT by writing your policy ‘in trust’, so it’s worth asking your insurer or adviser how to do this.