Do you need different life insurance cover when you get older?

Chris Torney / 11 July 2016

A look at over-50s plans and whole-of-life insurance cover.

The type of life insurance that suits you best generally depends on your age. 

For people with young families and substantial mortgage commitments, it makes more sense to look at term life insurance, which runs only for a fixed period – long enough to last until children leave home, for example, or until a mortgage is paid off.

But life insurance can still have an important role to play even if your children no longer depend on you financially or you now own your home outright.

Five reasons to consider buying life insurance.

Policies for the over-50s

The main type of life cover aimed at the over-50s is known as whole-of-life insurance. Such policies guarantee to pay out when the customer dies, as opposed to term insurance which only pays out if the death occurs before the policy’s expiry date.

Whole-of-life insurance means that your family will get a payout when you die: this can be invaluable when it comes to helping cover funeral expenses, for example, or even inheritance-tax bills.

How whole-of-life policies work

With this type of insurance, your family or other named beneficiaries are guaranteed a payout provided you pay your monthly premiums in accordance with the policy’s terms and conditions.

In some cases, premiums have to be paid for the rest of the policyholder’s life, while in others, they only need to be paid until a certain time, for example for the first 30 years or until the customer’s 90th birthday.

What are the different types of life insurance policy available. 

Fixed and variable premiums

Some policies guarantee that premiums will never rise, while with other whole-of-life deals, you may face increased costs at a later date. 

Such policies normally have some form of investment element: the provider invests the premiums you pay in order to generate enough capital to make the payout you want. However, if these investments perform badly, customers may see premiums rise.

Check before you sign up which type of policy you are buying.

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Eligibility checks

Unlike term insurance, whole-of-life policies do not usually require detailed medical checks. Eligibility is usually just based on age, for example you might need to be between the ages of 50 and 75 or 80 to sign up.

Issues to bear in mind

As with any financial product, you should check the small print carefully. Find out what would happen if you died soon after the policy was taken out: it is typical that providers will limit payouts within the first year unless the policyholder’s death is the result of an accident, for example.

Bear in mind also that any eventual payout may be less than the sum of the premium payments you have made while the policy is in force.

The opinions expressed are those of the author and are not held by Saga unless specifically stated.

The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.