If you’re reaching the big 5-0 this year, you’re in great company, with Friends star Jennifer Aniston, Jamiroquai singer Jay Kay and Welsh actress Catherine Zeta Jones all set to hit their milestone birthdays in 2019!
But entering your sixth decade can lead to some big questions, and many of us find ourselves giving our finances much deeper thought - especially as your 50s might coincide with other major events such as children leaving home or elderly parents needing extra care and support. So is now the right time to consider investing in life insurance? Read on!
What is life insurance?
Life insurance is designed to take care of your family or dependents in the event of your death. None of us wants to think about this happening, but the tough reality is that, should the worst happen to you, then your partner or family will probably still need to pay the bills, rent or mortgage and cover household expenses such as food and clothes. You may have children taking driving lessons or going to university, which can be expensive, and life cover gives your family breathing space at exactly the time they won’t want to focus on money matters.
How does life insurance for over-50s work?
When you take out a life policy, you will sign up to pay a monthly premium, which will be decided by a number of factors including your age and lifestyle. The policy will run for a set term, such an agreed number of years or until you retire.
Should you pass away, the insurance company will pay a predetermined lump sum to your beneficiaries. They can use this as they wish, with no strings, so they could choose to pay off the mortgage, take extended leave from work or settle outstanding bills that might add up if your death follows a long illness.
What is the right life insurance for over-50s?
Life cover can be taken out by adults aged between 18 and 80, with many policies being tailored towards each age range. Did you know, for example, that life insurance is cheaper the earlier you start your policy? But don’t worry if you’re deciding to invest in life cover in your 50s, as there is a still a policy to suit you.
Fixed or ‘term’ life insurance runs for a fixed period and pays out if you pass away within the term. It’s a good option, for example, if you want to be sure your children are provided for until they are 18. Whole of life insurance, on the other hand, runs continually until your death, and is therefore guaranteed to pay out (for this reason, it’s also known as life assurance, as a payout is assured).
You can also take out decreasing life insurance, where the level of cover decreases as the policy goes on, and increasing life cover, which can be a good option if the amount your dependents need might increase or to cover rising costs of living.
A popular option for people in this age group is over-50s life insurance. Guaranteed to pay out, it’s a type of whole of life insurance and is usually offered without the need for a medical. And if you’re nearing 50 with your partner, you might want to consider joint life cover, which can often be cheaper than taking out two separate policies.
Is life insurance the same as critical illness cover?
No, the two are very different products - although they are often bought together as a cost-effective package. Critical illness cover provides a lump sum should you be diagnosed with one of a number of listed chronic or terminal illnesses, such as cancer, multiple sclerosis, a heart attack or a stroke and can again pay off your mortgage or fund necessary adaptations around your home.
There’s a lot to consider as you enter your 50s and the different types of policy can be confusing. Many people think critical illness cover is the same as income protection insurance, for example; they are very different but you may need both. You can chat to our professional advisors on the phone by calling 0800 862 0373 - just as soon as you’ve recovered from your birthday celebrations, of course!