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How Over 50 Life Insurance works

You have probably seen countless adverts promoting over 50s life insurance, but still might be completely in the dark about what it actually is.

This type of insurance provides your loved ones with financial security after you are gone - helping them to cover the costs of things like your funeral or paying off the rest of the mortgage.

There are many companies out there offering over 50s life insurance. Each of these companies are likely to offer slightly different cover, so choosing the right policy is incredibly important.

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Who can purchase over 50s life insurance?

In this respect, the policy does what it says on the tin; anyone over the age of 50 can purchase this type of insurance. The people that this product is most likely to suit have depended on what they want to protect financially, such as children, partners or spouses.

The money that is released upon the death of the policyholder can be used to pay off any debts, such as a mortgage, allowing your loved ones the opportunity to grieve without any additional worries.

You can usually get cover without having to undergo any medical checks, which means even people with poor medical histories will still qualify for a policy. 

When should you buy a policy?

The older you are when you purchase over 50s life insurance, the more expensive it is likely to be. This is because you have less time to pay your premiums, meaning they will be higher compared to if you had purchased the policy earlier in life.

Buying over 50s life insurance as soon as you qualify for a policy is likely to save you money in the long run.

Are there different options?

As with most types of insurance, there is more than one kind of product, meaning you should be well informed before making your decision.

Here is a quick summary of the different categories of cover:

  • Level term – This pays out a fixed lump sum if you die during the policy term. The sum doesn’t change over time, meaning you know the exact figure that will be paid out once you are gone.
  • Increasing term – This type of policy factors in the rising cost of living, meaning the sum paid out will maintain its value throughout the term. It either rises by a fixed amount each year or increases in line with the Retail Prices Index (RPI) measure of inflation.
  • Decreasing term – The sum paid out by this cover decreases over time, matching any debt that will reduce with each passing year, such as a mortgage.
  • Convertible term – This policy allows you to change their insurance into whole-life cover, meaning it will last until your death rather than a set term.
  • Whole-life – This policy offers protection until your death giving your loved ones a lump sum when you die.

How does over 50s life insurance work?

Typically, over 50s life insurance lasts for life and pays out a lump sum once the policyholder has died. The higher the lump sum, the more expensive the monthly premiums will be. Once you have taken out the cover, there is normally a period of two years where no claims can be made against the policy.

As the policy premiums are paid until your death, you may end up paying more in than will be paid. However, there are some providers that will offer either the original benefit sum or the total amount of premiums you have paid in - whichever is greater.

How do you purchase a policy?

Before you hand over any hard earned cash, make sure you shop around for the best policy for you. The policy that you purchase should reflect the amount of debt you are likely to have when you die.

For example, will you still have money left to pay off your house or credit cards? The idea of over 50s life insurance is to ensure these debts are not left for your loved ones to deal with.

You can use comparison websites to find the best deal or go directly to companies that you have researched. It should then be quite straightforward to set up a policy online.

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