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Over 50s life insurance is a product that promises a lump sum when you die. Provided you don't miss any premiums, it's guaranteed to pay out.
One factor that often appeals is that it's not medically underwritten, which means any pre-existing health conditions won't affect the cost. The main things you'll be asked about – and that will affect your premiums – are your age, your smoking status, and the level of cover you want.
On paper, this may sound tempting. And if you've seen ads for this type of product, you may be wondering: which is the best over 50s life insurance? But there's a catch.
A key issue is that over 50s life insurance often pays out less than you have paid in premiums. Which?, along with many other financial experts, does not advise buying this kind of product.
That’s not to say people over 50 should not have life insurance. With many couples having children in their 40s, and people approaching retirement age still with mortgages, life insurance for people over 50 makes perfect sense.
But it's important to understand the differences between over 50s life insurance and standard life insurance – which is also available to those aged 50 and over.
We examine what an over 50s life insurance policy is, how it works and whether alternatives might be better so you can decide the best life insurance for you.
Choose life insurance, health insurance, income protection and/or critical illness cover via LifeSearch and get a £50 John Lewis gift card.
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Most people would be better off not taking out over 50s life insurance.
The monthly premiums often aren't too high, starting from as little as a few pounds a month in exchanged for a fixed payout. But, proportionally, the payouts aren't that high either.
This means that, crucially, it won’t take too long before the amount you will get back is less than you have paid in. At that point, you would have been better off sticking the money under your mattress, so even a simple savings account would be better.
Plus, because the payouts are fixed, the effect of inflation will erode the value of the payout over time.
Another downside is that, with over 50s life insurance, you must pay the premium until you die. If you stop paying, your entire policy is cancelled and you get nothing back.
If you need life insurance to cover a mortgage or to provide for your family, consider instead getting a standard term insurance product underwritten based on your age, health and lifestyle.
If you want to leave something for your family, consider setting up a junior Isa for children or grandchildren, or making tax-efficient gifts.
If you live to an average life expectancy, you will almost certainly pay more in premiums than the value of an over 50s life insurance payout when you die. So if you're in decent health, over 50s life insurance plans are unlikely to be a good purchase.
However, because there's no medical underwriting, you typically won't need to declare any health conditions. So if you have a pre-existing health condition that is likely to significantly shorten your life expectancy, over 50s life insurance isn't automatically a terrible idea – provided you go in with eyes wide open.
Find out more: Can I have multiple life insurance policies?
There are two main types of standard life insurance that are available to people of any age, including over 50s.
Whole-of-life cover pays out an agreed amount whenever you die, providing you continue paying the premium (some policies stop taking money when you reach 90).
Term insurance covers you for a fixed number of years (the term). You only pay premiums until the end of the term, and only receive a payout if you die within the term.
With term insurance you get three main choices:
You can choose between receiving a lump sum and getting a monthly payment – called family income cover.
Because family income cover will only pay out the monthly amount until the end of the term, the total the insurer will have to pay out reduces over time, so this is a cheaper product.
If you want, you can add critical illness cover (CIC) to a life insurance policy.
This type of cover pays out if you are diagnosed with one of a list of 100 or more diseases or conditions. The key to watch out for here is the severity required before payments are made. Expert advice may help.
Bear in mind that if you need to claim for critical illness and later die within the life insurance term, a combined policy that pays out for critical illness may reduce the final life insurance payout when you die.
You can also buy critical illness cover as a standalone policy, which could be worth considering if you want to receive a larger total payout if you claim on both policies.
Many life insurance policies also include a terminal illness clause, which triggers the policy to pay out if you are given less than 12 months to live.
This allows you to put your affairs in order and make sure your family is looked after before you die. The full amount is paid out at once, and you do not have to pay any back if you outlive the doctors’ expectations.
Standard life insurance is priced based on your age, your health and your lifestyle. The older you are, the more expensive life insurance will be.
Any pre-existing medical conditions that risk shortening your life, add to the premium too.
And your lifestyle choices – if you smoke, how much you drink and whether you do any dangerous activities – can all top up the premium further.
Find out more and get fee-free advice on life insurance using the service provided by LifeSearch. Discover more.
It is possible to buy non-medically underwritten guaranteed acceptance life insurance if you cannot get standard cover, but it is more expensive again.
The older you are when you take out life insurance the higher the premium. This means that over 50s will typically pay more than 30-somethings.
In addition, people are more likely to have developed medical conditions or health problems by the time they get to 50, pushing premiums higher. So even though many will have given up smoking and ceased dangerous activities, premiums are going to be higher.
However, for most people over 50 a standard life insurance policy still trumps one marketed as an over-50s policy.
In early 2023 we got quotes for a 53-year-old non-smoker in reasonable health:
In this case, standard life insurance is likely to work out cheaper for the same level of payout.
Life insurance payments are not taxed, but may be added to the value of your estate and subject to inheritance tax.
However, you can put your life insurance in trust to avoid this. Many life insurers offer this option when you buy cover.
Many providers, such as Legal & General, Aviva and Vitality, offer policies direct from their own websites.
Most price comparison websites, such as MoneySuperMarket, Compare the Market and Uswitch, also compare life insurance.
You can also use an independent financial adviser who might already be providing you with other financial advice and products, such as savings, pensions and mortgages.
Or you can turn to a specialist life insurance provider, such as LifeSearch, that focuses exclusively on life insurance and has direct contact with underwriters.
Choose life insurance, health insurance, income protection and/or critical illness cover via LifeSearch and get a £50 John Lewis gift card.
Get a quotePolicy must be active for 90 days before gift card is issued. T&Cs apply.
When you're getting a standard life insurance quote, you will be asked a set of about ten questions. If you answer 'yes' to any of them you will have to provide more details.
It can help make the process smoother if you prepare the answers to the typical questions in advance, so you're not searching around for medical records at the same time as filling in forms, or trying to quickly calculate how much cover you need.
Initial questions usually relate to your medical history.
You will also need to detail your lifestyle, not just whether you smoke and how many units of alcohol you drink, but any dangerous activities you undertake – that even includes things that you might consider routine, such as riding a motorbike.
You'll also be asked how much cover you want, and how long you will need to have life insurance in place – called the term. Consider whether you'll need the same amount of cover in place for the whole term (level term), if it would be ok for the amount of cover to decline (decreasing term), or if you need it to grow (increasing term)?
It's important to balance the level of cover against what you can afford in premiums, and whether you will be able to afford it throughout the term of the policy. If you cancel life insurance, it simply stops – you do not get any money back.
If you do not need a standard life insurance policy but want to have a lump sum for funeral expenses or for your family, consider a savings account.
You could also look at buying a pre-paid funeral plan – in 2022 these became regulated by the Financial Conduct Authority.
Search the UK's leading insurers using the service provided by LifeSearch.
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