As we grow older and start to experience more health problems it becomes more difficult to obtain life insurance. Often, this does not pose a significant problem as the need for life insurance usually decreases as we age. However, for example, if we were to start, or acquire, a new family later in life this would often result in increased financial obligations; as a result a new life insurance policy would be required. Some companies do offer life insurance policies for the elderly, but it is vital that you read the small print carefully before taking out a policy. Pay particular attention to the amount of cover offered, what exactly the policy provides, and the medical requirements.
There are a number of different life insurance policies on offer for the elderly including over 50’s life insurance plans, term life insurance, income protection, critical illness cover, self-insuring, and funeral plans. Insurers are likely to offer you cover up to the age of eighty as a maximum.
An over 50 life plan is widely advertised and is sold on the premise that there is no medical required, and that you are guaranteed to be accepted. However, this type of policy can have many disadvantages, and there are likely to be other products on the market more suited to your needs. One such product is term life insurance designed specifically for the over 50’s. A term life insurance policy runs for a set length of time, and only pays out if you die during the policy term. This makes them considerably cheaper than whole of life policies. If you need life insurance that covers you for a set period, for example, long enough to provide for your children until they become self-sufficient, or long enough to pay off your mortgage if you were to die whilst a balance was still owing, then term life insurance could very well be the right choice.
If you have a partner then you may look at the option of taking out a joint policy as they are most often cheaper than taking out an individual policy. However, bear in mind that these types of policy are only really suitable if both partners have no other dependants to consider, and the value of their assets is not relevant when they have both passed away.
When shopping for life insurance if you are over fifty always remember that the older you are the higher your premiums will become, and the number of insurers you have to choose from will be far less. This is due to the fact that older people pose more of a risk to insurance providers, as do those individuals with pre-existing medical conditions.
When you are young you may decide to take out a whole of life policy. This type of policy is guaranteed to pay out when you die as long as you are up to date with the payments. A younger person is likely to find the premiums for this type of policy quite affordable as insurers calculate that they will be likely to be paying for the policy for a considerable length of time.
When deciding which type of life insurance policy is best for you then remember to take into account the cost of inflation, which will decrease the value of the payout over time. Also bear in mind that if you were to die during the first few years of the policy (known as the initial wait period) your dependants would only receive a payout equivalent to the amount you have already paid in, and not the guaranteed payout. In addition, take into account that a life insurance policy is a long term commitment; if you miss payments or terminate the policy early you will receive no money back, and you may find that if you live for many years after the inception of the policy you could end up paying far more in premiums than your dependants would receive in the final payout.
If you are concerned that your relatives will be stuck with the cost of paying for your funeral expenses then a dedicated funeral plan could be a good choice. However, this type of policy can vary between providers, some being considerably better than others, so shop around and pay careful attention to the small print. They are designed to cover the cost of your burial, but many have failed to pay out a sufficient amount to meet these costs and have been heavily criticised.
If you have yet to retire income protection insurance is available for the over 50’s. They have become more popular in recent years as many people continue to work later in life. They provide monthly payments if you are unable to work due to illness or accident. Cover is usually arranged over a period of years to coincide with your retirement age, or the end of your mortgage. The maximum retirement age is usually set at seventy. A similar product to income protection insurance is critical illness cover which provides a payout if you are diagnosed with a serious illness listed in the terms and conditions of the policy. Take into consideration that as you age the premiums for all types of life insurance products will become more costly.
If you are reluctant to purchase a life insurance policy in later life, perhaps due to the high cost of premiums, then you could also consider ‘self-insuring’. This means saving and investing your money rather than paying into a protection policy.