Selecting the over 50 life insurance thats right for you
Article published on 5th June 2009
It is common knowledge that as you get older your insurance premiums can get more expensive because of the higher perceived risk that you will need to make a claim.
This makes the decision about over 50 life insurance increasingly important and essential that you select the right policy for your circumstances with the best value for money.
A number of different over 50s life insurance policies exist but some have major differences to others both in price and in features. Its important to realise that in most cases with life cover, paying more does not necessarily mean a better policy!
Types of Over 50, Over 60 and Over 70 Policy
Three main types of life insurance exist once you pass your 50th birthday:
- Traditional Life Insurance
- Over 50 Plans
- Whole of Life Insurance
Each of these policies works slightly differently and each tend to be priced differently with a variety of pros and cons.
All are designed to pay your family a lump sum of money upon your death but variations occur when you consider premium, length of cover and how long you need to of had the policy before a full payout will be made.
Traditional Over 50 Life Insurance
This type of life insurance pays out a lump sum of money to your family or nominated beneficiary (with the use of a trust) upon your death.
The policies cover you for a set number of years and after those years the policy ends and you are no longer covered.
Over 50 Plans
Over 50 plans, often advertised on the television, are again designed to pay your family a lump sum of money and run until your death at whatever age. The downside of these plans is that if you die within the first two years (with most providers although some will cover you after 12 months) you will not receive a full payout from the policy. Instead you would receive some of your paid premiums back which in reality probably wouldn't add up to much!
This type of life insurance usually comes without any medical underwriting which presents a major risk when your family come to make a claim.
Because you have not undergone any medical questioning or examination, there is chance that something in your medical background could give the insurance company grounds to decline a claim, an act known as non-disclosure.
Another major downside to over 50 plans are their premiums which tend to be much higher than traditional over 50 life insurance or whole of life insurance.
Whole of Life Insurance
Whole of Life Insurance takes elements from both of previous types of policy we have covered.
It will pay your family a cash lump sum upon your death and can be written into a trust to avoid inheritance tax and ensure speedy payout. It runs from the time you take the policy until the point at which you die but unlike over 50 plans, there is no time period before you can make a claim.
Waiting to make a claim
So to summarise, with over 50 plans you must survive up to two years before your family can make a claim but with traditional life insurance and whole of life insurance a claim could be made immediately. For example, if you were to take a policy today and then unfortunately die tomorrow, you would still be eligible for a full claim to be made.
So which over 50 life insurance is right for me?
The policy which is suitable for you depends on a number of factors. Generally speaking if you are in reasonable health (a vast majority of people who are seeking insurance) then over 50 plans for not for you! Taking an over 50 plan for a healthy person will usually result in you paying more than you need to with the risk of a non-disclosure claim.
The other two options are the most suitable for most people and selecting between the two usually comes down to premium. Because a whole of life policy will cover you right until your death, no matter what age, the premiums are generally more expensive than a traditional life insurance policy.
In any case, if you are unsure of the cover which is best for you, you should consult one of our fully qualified advisers who will be able to present a range of options to suit your needs and affordability.
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