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How life insurance for over 50s can help your family

Last updated: 02/02/2023 | Estimated Reading Time: 5 minutes

An over 50s life insurance policy will provide a guaranteed pay-out of a few thousand pounds to your loved ones when you die.

While more traditional term and whole of life insurance policies can offer very large sums, or even monthly income, to support your survivors, the pay-outs from over 50s policies are more modest. They won’t replace your income or substitute for an inheritance, but they can cover your funeral costs, pay off debts, or provide a small gift to your loved ones.

Let’s take a look at some of the many ways an over 50s life insurance policy can help your family and loved ones:

In This Guide:

Pay for your funeral

Life insurance provider SunLife found that the average basic funeral cost £4,056 in 2021, while more elaborate send-offs, including wakes, come in at £8,864. With death being so expensive, it’s little wonder that more than 20% of families borrow money to bury their loved ones, according to SunLife.

Many people take out an over 50s life insurance policy intending that the pay-out be used to pay for their funeral, including expenses such as their burial, cremation, and any party or wake. 

Some policies come with an optional funeral benefit, which tops up your policy with an extra £200-300 earmarked for your funeral, and often paid directly to a pre-selected funeral director. Usually, this funeral benefit comes at no additional cost.

Cover debts

If you have any unsettled debts that you’re worried about leaving behind for your family, you can arrange for an over 50s life insurance policy that will cover them. Because over 50s life insurance policies have fixed pay-outs, you can align them with any debts you have.

Leave behind gifts for your family

Most over 50s life insurance policies provide pay-outs of under £10,000. They therefore won’t help your family with ongoing expenses like housing or education.

But they can provide a small gift for your loved ones. The pay-out will be issued to your named beneficiaries in cash shortly after your death, and it won’t be subject to taxation.

These gifts can be used to fund a holiday for your family to brighten them up after your death. The money might also be enough to contribute to home improvements, or even the deposit on a new property.

Provide insurance coverage for people who can’t qualify for or afford other policies

By late middle age, many people struggle to qualify for term life insurance or other types of whole of life insurance due to their age or health. If accepted, they may face very high premiums for this coverage.

Over 50s insurance policies provide an alternative for these people. Acceptance is guaranteed if you fall within the policy’s age range (usually 50 to 80). You also won’t be asked questions about your health history or be subjected to medical checks.

Additionally, the premiums are more affordable: you can often buy an over 50s insurance policy for just a few pounds per month.

When isn’t over 50s life insurance suitable?

If you’re concerned about replacing your income to support your dependents, or paying off a large debt like a mortgage following your death, over 50s life insurance probably won’t be suitable. This is because the sums insured are so modest (usually below £10,000 and always less than £25,000). 

Additionally, if you live for a long time, you may end up paying more in premiums for the policy than your family receives following your death. Inflation over decades may also erode the real value of the pay-out by the time you die. Therefore, over 50s life insurance policies may not be good value for money for people in good health at the lower end of the age range.

On the other hand, if you’re suffering from a serious illness then an over 50s life insurance policy also probably won’t be beneficial. While you would be accepted for the policy with no questions asked about your health, the policy would likely come with a waiting period of one to two years. This means your family won’t receive the pay-out if you die during that period, unless your death is accidental.

Alternatives to over 50s life insurance

  • Term life insurance: If you’re on the young side of the over 50s age range and in good health, you might be able to qualify for an affordable term life insurance policy that would leave more money behind for your family. If you have a mortgage to pay off, you should consider a decreasing term policy linked to that debt, which will be more affordable.
  • Other whole of life insurance policies: If you like the guaranteed pay-out of an over 50s life insurance policy but want to leave more money behind, you could consider another type of whole of life insurance policy, also called assurance. However, the premiums on these policies can be high and you’ll need to be in good health to qualify.
  • Prepaid funeral plans: If you’re concerned about covering funeral expenses, you might also want to consider a prepaid funeral plan. These plans allow you to pay in advance for your funeral, usually in monthly instalments. Currently, around 20% of UK funerals are paid for by a funeral plan. The sector has attracted some controversy for being unregulated but will fall under the eye of the Financial Conduct Authority (FCA) from 29 July 2022, giving greater protection to policyholders.
  • Savings bonds or ISAs: If you want to leave behind a small cash gift for your survivors, a savings bond or ISA might be more appropriate. Your loved ones will get all the money you put in, plus interest that may offset some of the loss of value through inflation.

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