The cost of life insurance goes up with age and policies for seniors are usually more expensive than standard
1Accurate as of February 2024
The way your life insurance policy works depends on the type of policy you own. Over 50s life insurance policies offer a guaranteed pay-out for anyone over 50. They don't have an end date, so your cover will continue for as long as you keep up with the premiums. Because this policy has no age limit, it is typically more expensive than a standard life insurance policy. These types of policies also tend to be more forgiving if you have any pre-existing conditions, which tend to be more common as we get older.
Term life insurance, on the other hand, can be bought by anyone over 18 but has an age limit of 65 to apply for a policy. A maximum age limit may also apply to your cover, with 70 being a typical maximum age limit to make a claim on your policy. If you are over a certain age, this may not be the best life insurance option. These policies increase in cost with age, put a time limit on your cover, and may not cover your pre-existing conditions.
Leave something for your loved ones: Senior life insurance provides you with a guaranteed pay-out, so will have something to leave your loved ones as a gift when you pass away
Help cover funeral costs: The cost of a funeral isn't something everyone can afford but with a life insurance pay-out you don't have to burden your loved ones to pay for it by themselves
Pay off your mortgage: If you have an outstanding mortgage, setting up mortgage life insurance can provide financial protection to pay off the remaining debt should you pass away meaning your loved ones won't have to worry about losing their home or keeping up with mortgage repayments
Avoid taxation: Even if you have left provisions in your will, you may want peace of mind that the cost of inheritance tax is covered. After all, a rate of 40% will be applied to estates worth over £325,000 (although you may be able to add Main Residence Allowance onto this). There’s also the option to write your policy in Trust
Expensive: Buying life insurance as a senior can be expensive and the cost increases if you have any existing health problems. The cost of life insurance goes up as you get older, so if you are over a certain age it can be difficult to afford
You might pay in more than is paid out: You tend to get a smaller pay-out for senior life insurance policies than you do for standard polices. So, if the premiums are high and you live for a long time, there's a possibility that the premiums you paid end up being worth more than your policy's pay-out
Inflation reduces your pay-out: The value of your life insurance pay-out may be reduced by inflation over time. While some providers may allow you to increase your cover to keep up with inflation, the cost of your policy will go up as well
No missed premiums: If you fail to keep up with your life insurance premiums, your policy will end and none of what you've aleady paid into your policy will be refunded
There is no one size fits all when it comes to life insurance but it's important that the policy you choose covers exactly what you need it to.
When taking out your policy, you should think carefully about how much cover you need. Over-insuring can be a costly mistake, but under-insuring could leave your loved ones with a lack of support. Take some time to calculate how much cover you need – whether you want to pay off your mortgage or cover your funeral costs.
If you have any pre-existing health conditions it's important that your life insurance policy will cover these as well. Make sure you read the terms of your policy carefully and keep your policy documents safe so you and your loved ones know exactly what your policy covers.
You shouldn't jump for the first policy you find online. There are a lot of life insurance providers out there for you to browse and taking the time to review your options can help you find the best deals on the market
Positive lifestyle changes will reduce the cost of your life insurance, such as giving up smoking and reducing the amount of alcohol you regularly drink
Not all life insurance policies are the same and providers sometimes offer all sorts of extras and gifts when you buy a policy from them. Review these details carefully when your shopping for insurance. Sometimes they can add to your premiums
It can be tempting to pick the most comprehensive option when buying insurance but it isn't always necessary. When deciding on a pay-out, take your time to calculate how much cover you actually need
A moratorium period is the waiting period between when you take out your senior life policy and the earliest it will pay out. It usually lasts 12 or 24 months depending on the insurer. Moratorium periods are relevant to senior life insurance policies because you are not asked any medical questions when taking out the policy.
It may be a good idea to place your senior life insurance policy in trust. This is where the sum is paid directly to your beneficiary, rather than becoming part of your estate. It means it is not subject to inheritance tax and can speed up the process of getting it to your beneficiaries.
Life insurance is designed to pay out a benefit to your loved ones in the event of your debt, so it will not usually pay-out to cover you if you fall ill.
However, most life insurance policies offer a type of terminal illness cover. This means that if you are diagnosed with a terminal illness with less than 12 months to live, you can make a claim on your life insurance. Your benefit can be used for care and end-of-life preparations.
If you want insurance to cover you for serious illnesses, you can optionally add critical illness cover to your life insurance policy. This extra cover allows you to claim your life insurance benefit if you are diagnosed with a critical illness.
If you take out a specialist policy for seniors, you will not usually need to answer any medical questions. Your policy will cover you automatically for any existing health problems with a guaranteed pay out. However, if you take out a standard life insurance policy, you will normally have to answer some medical questions and any serious pre-existing conditions may be excluded.
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