An aging UK population
It is no secret that people in the UK are now living longer than ever before.
As a result, making financial provisions for our passing is being put off until later and later in life.
It is not uncommon nowadays for those in their 60s, 70s or even 80s to be looking at arranging life insurance.
Whether you want to leave an inheritance, cover rising funeral costs or settle outstanding debt in your name, there is always an option – even in later life.
Age isn’t everything
Generally speaking, the older you are when you take out life insurance, the more it is going to cost you each month.
However, contrary to popular belief, age isn’t necessarily the most significant factor when taking out life insurance in later life.
Whether or not you are accepted and the cost of your premiums is calculated based on the level of risk you pose to the insurer.
Those in the later stages of life are statistically more likely to have suffered a medical condition, putting them at higher risk.
It is this which causes our older population to be charged more for their life insurance as opposed to their age alone.
Therefore, those in particularly good health may be pleasantly surprised by the affordability of their premiums.
Term-based life insurance
For many just entering later life, term-based life insurance is still a valid option.
However, as you age, the term offered and the price tag attached to this type of policy may make it unsuitable.
The older you are, the more likely you are to make a claim within the term, therefore, insurers mitigate their risk either by limiting the term length or charging inflated premiums.
Term based life insurance only protects you for a specific period of time and if you do not pass during this time frame, the policy expires and no pay out is issued.
Particularly in the latter stages of life, it is likely you are looking for something more assured, reducing the suitability of this product further.
On the other hand, it is possible that in your 50s and 60s there is still an outstanding balance on your mortgage, but once your mortgage has been cleared you will no longer require term cover.
As a result, taking out a more expensive, shorter policy, which guarantees a pay out, may be more appropriate to offer you the level of cover required.
Life Insurance
Guaranteed over 50 plans
For those in later life and perhaps in less favourable health, fear not – There is still a cost effective option.
Over 50s plans offer guaranteed acceptance for all UK residents aged between 50-85 years.
No medical information is required, including whether or not you smoke, meaning your health status will not increase the amount you pay each month.
These policies last for the rest of your life and therefore, guarantee your loved ones a pay out.
This is a form of life assurance (not life insurance) as a pay out is assured.
The pay out can then be used for whatever your loved ones deem necessary:
- The payment of your funeral, (average cost £4,271 – source: SunLife)
- Provide an inheritance
- Covering the cost of outstanding debts
- Funding day-to-day living expenses of loved ones.
Do I actually need life insurance?
In the latter stages of life, when looking into life insurance, the primary purpose of the pay out is often intended to cover the cost of your funeral.
If this is the sole purpose of the cover you are looking to arrange, you may find yourself benefitting more from a prepaid funeral plan.
As mentioned, life insurance in the later years can become costly, whereas a funeral plan has a fixed cost regardless of your age.
It also allows you to pay for the cost of your funeral at today’s prices, (often minus third party costs).
The cost of funerals in the UK has risen +122% over the past 15 years and shows no signs of slowing down. So, locking in today’s rate could save a pretty penny.
However, a funeral plan can only be used to cover the cost of a funeral. If you want the flexibility of meeting other costs then life insurance would be more suitable.
You’re never too old
As you age, the need for life insurance simply evolves.
Cover may no longer be needed to cover the cost of your mortgage or to support your children, but instead leave an inheritance or cover the cost of your funeral.
With such a variety of products available, it is always possible to find the level of cover you need whatever stage of life you are at.
Remember, premium costs can vary significantly between insurers. In order to secure the right policy at the best price compare quotes.
You can do this online via a comparison website, or alternatively use an FCA registered broker, like Reassured, to do the work on your behalf (for free).
Whichever cover option works best for you, the single most important thing is to not put a financial burden on your loved ones after you are gone.
So, why not seize the day and secure the future?
About the Author / Gareth Hargreaves
Gareth looks after all editorial content on 50connect. He is the Swiss Army knife of content ideas and production.
