As we age, our risk of imminent death increases. While there is just a 0.07% chance a 30-year-old male will die before his next birthday, that rises to 0.34% at age 50, and 1.2% at age 65. Insurance companies are therefore more reluctant to extend life insurance to people over the age of 50. Premiums will be higher, and some policies will have upper age caps that exclude OAPs and those in middle-age entirely.
In This Guide:
What are my options for life insurance as a senior citizen?
When seeking out life insurance quotes past a certain age, you have several options: a regular term life insurance policy; dedicated over 50s policies, a form of life assurance; and funeral plans. The option you choose will depend on your health, how much money you want to leave your beneficiaries and for what purpose, and the level of premiums you can comfortably afford to pay.
Term life insurance products
Term life insurance policies are the most popular choice on the market for younger folk and will be a good option for you once you're over 50 too. These policies run for a certain period of time and pay out if you die within that time frame. Many people arrange these policies to line up with their financial and family obligations. For instance, syncing a decreasing term policy with a mortgage, or a level term policy with the age of their youngest child.
However, past a certain age, you'll be excluded from term life insurance cover by some providers. Insurers will all have a maximum age for new cover which will range between 65 to 85 years of age. You won't be able to take out a policy past that age.
Additionally, if you do come in under the cut-off, you'll be limited in the length of policy you can acquire. Insurers set a maximum age past which their coverage won't extend. This is typically 74 years old, but occasionally policies will cover you in to your 90s. These will be the most expensive on the market.
In general, the older you are when you take out the policy, the more you'll pay in monthly premiums. Opting for a shorter term, a decreasing term policy (where the payout declines over time), or a smaller payout will make your search for a policy easier and bring premiums out of the stratosphere.
Having pre-existing health conditions, which become more common with age, will further complicate your search for term life insurance cover. It will restrict the number of policies for which you are eligible and inflate your premiums. You may be required to submit medical records or undergo a medical exam as part of the application process, and you could be rejected on that basis. If you're already in a high-risk group - for instance, if you're diabetic or a smoker - you may find it particularly tricky, if not expensive, to get term life insurance coverage in your golden years.
Over 50s policies
Dedicated over 50s policies are a type of whole of life or life assurance policy. That means they last for the rest of your life and, if you keep up with the monthly premiums, a fixed, lump-sum payout is guaranteed to your survivors, whether you die in five years or 35.
With these policies, if you're over 50 and under 80 (and occasionally 85), you can't be denied coverage. You won't have to submit information about your medical history or undergo a physical exam - acceptance is guaranteed.
However, over 50s policies come with much lower payouts than term life insurance. They typically won't be enough to support a family but can offset any costs your survivors may incur in the immediate aftermath of your death, including funeral expenses.
Over 50s life insurance policies can be somewhat inflexible - miss one monthly premium and you've forfeited your survivors' rights to the payout. And if you live a long time, you may end up paying more in premiums than your beneficiaries will receive after your death. Inflation can also erode the value of the payout. But because there's no cash-out value for these policies, you're locked into those monthly payments if you want to recoup anything.
While the sum insured on over 50s policies is mostly fixed, most come with a qualification period, or moratorium, of one to two years at the outset. If you die during this period, your family won't be able to claim the full amount.
If you want to specifically ensure that your family can meet funeral or burial expenses following your death, you can seek out dedicated funeral cover policies. In 2018, the average funeral in the UK cost £4,271 - no small sum.
You can obtain funeral cover as part of your term life insurance or over 50s policy, but you can also take out a dedicated, pre-paid funeral plan. With these policies, you pay in advance for your final send-off, either in a lump sum or monthly instalments. This money is then either invested or put into an insurance plan by a funeral director or insurance provider. Following your death, it is paid out to match your funeral costs.
These policies, like over 50s life insurance policies, aren't always good value for money. If you live for a long time after taking them out, the total you'll pay in premiums could easily eclipse the sum paid out after your death. You should also read the terms and conditions of these policies carefully: some will pay out only to cover the most basic costs of your funeral and exclude other big-ticket items, such as the cost of the burial plot and the memorial.