Specialist life insurance policies for the over 50's are widely advertised as an easy way to ensure loved ones receive a legacy or help with funeral costs.

With the guarantee of acceptance and no need to provide a medical history in order to qualify, these policies can seem attractive, but as with any financial product, it pays to consider the pros, cons and alternatives before making a commitment.

What Is Over 50's Life Insurance?

Over 50s life insurance is an insurance policy aimed specifically at those aged 50 and older. They are life policies, meaning that rather than lasting for any fixed term, cover extends for the rest of your life, and the policy pays out a lump sum to your beneficiaries upon your death.

There are usually no medical questionnaires or criteria around health conditions, and the maximum payout offered by over 50s life insurance policies tends to be around £3,000, no matter how much has been paid in monthly premiums.

What Are The Advantages of Over 50's Life Insurance?

One of the primary advantages of over 50s life insurance is the ability to access insurance without disclosing a medical history. People with pre-existing conditions can find life insurance difficult and expensive to access, so these policies offer a valuable solution.

Over 50s life insurance policies often guarantee to pay out a particular lump sum once a claim is made, which can provide certainty over budgeting for expenses such as funeral costs.

Premiums for over 50s life insurance policies start at around £5 per month, depending on age and smoking status, and there is the potential for the lump sum to be worth more than the amount paid in in premiums if the policy is claimed within a few years of being taken out.

What Are the Disadvantages of Over 50's Life Insurance?

Since payouts from over 50s life insurance policies tend to be capped, there is a possibility that you may pay more in monthly premiums than your beneficiaries receive in a lump sum payout.

Over 50s life insurance policies do not offer the ability to cash in on your plan or to receive a refund of premiums if you decide to cancel your plan, meaning you have to continue to pay monthly premiums in order to qualify for an eventual payout.

Since many over 50s life insurance plans cap the maximum payout, this may provide less than your beneficiaries need to meet funeral costs or other financial commitments, especially if the plan does not account for inflation.

Many over 50s life insurance plans begin with a ‘qualification period’ of one to two years, during which, if you were to pass away, your beneficiaries may receive a refund on your premiums only, instead of the full lump sum value of the insurance policy. This can disadvantage those with terminal health conditions or any policyholder who passes away unexpectedly within a short time of taking out their policy.

Is Over 50's Life Insurance the Right Option For Me?

As with all financial arrangements, it’s important to examine the small print before making any commitments. We advise working with an independent financial adviser such as the team here at McCrea to fully understand the advantages and disadvantages of over 50s life insurance, as well as alternatives such as saving and investing, and the overall impact on your estate planning arrangements. Why not get in touch with our friendly experts today for some personalised advice?