Important Financial Decisions

As you get older, life insurance can become more important. Although you're likely to have fewer dependants to provide for, end of life is coming nearer and you may want to have some money available to meet funeral costs and other expenses, as well as leaving something for your children or grandchildren. There may be money available in your estate but it can be tied up until everything is sorted out, so a life insurance payout can be a benefit at an upsetting time.

Many life insurance companies recognise this need and so provide plans aimed specifically at the over 50s. These have many common features that include guaranteed cover with no health questions or medical examination. There is generally a scale of premiums and the cover available will depend on your sex and whether you're a smoker as well as the amount of premium you pay.

Most policies won't pay out for death due to health problems in the first two years but will cover accidents right from the start and provide full cover after the initial two-year period. All require that you keep paying the premiums because, once they stop, the plan will lapse with no value. However, many plans set a maximum age limit for paying premiums, such as 85 or 90, with cover then maintained once the payments stop. Nevertheless, depending on how long you live, the premiums paid may exceed the amount due on death.

The companies offer different plans with varying terms. Some are fixed plans where the premiums and the amount paid out never altering. Whilst these offer certainty of unchanging costs, the benefits can be badly affected by inflation and the payout may not meet the intended purpose. An alternative is an increasing plan where the benefits rise each year in line with the RPI. However, premiums often increase at a faster rate.

Some over 50s life insurance is specifically intended to pay for funeral costs. In these cases, the payment often goes directly to an associated funeral plan provider to cover the cost of cremation or burial. This has the advantage that many arrangements can be made before death, saving the worry of having to find a company to deal with matters. It's even possible to choose the music for when the coffin disappears.