What is over 50s life insurance?

Over 50s life insurance is a product promising a lump sum when you die. It’s not medically underwritten and provided you pay the premiums, it’ll pay out.

The problem with an Over 50’s Life Insurance policy is that it can pay out less than you have paid in premiums.

But it’s important to understand the important differences between over-50s life insurance and a regular life insurance policy (which are also available to the over-50s).

Is it worth getting over 50s life insurance?

Most people would be better off not taking out over 50s life insurance.

With over 50s life insurance you must pay the premium until you die. If you stop paying you get nothing back.

Crucially, it won’t take long before the amount you will get back is less than you have paid in.

At that point, you would have been better off sticking the money under your mattress, so even a simple savings account or for example an ISA Individual Savings Account would be better.

If you need life insurance to cover a mortgage or to provide for your family, consider getting a standard term insurance product underwritten based on your age, health and lifestyle.

Understanding the different types of life insurance available

There are two main types of life insurance:

Term Insurance covers you for a fixed number of years (the term).

Whole of Life Cover pays out an agreed amount whenever you die, providing you continue paying the premium (some policies stop taking money when you reach 90).

With term insurance you get three main choices:

Decreasing term life insurance is usually tied to a debt, such as a repayment mortgage, so the amount paid out if you die during the term reduces as your monthly repayments reduce the total amount owed
Level term life insurance pays out an agreed fixed amount if you die during the term
Increasing term life insurance means the amount paid out if you die increases during the term, usually in line with a measure of inflation (CPI or RPI)

You can then choose between receiving a lump sum and getting a monthly payment – called family income cover.

Family Income Cover will only pay out the monthly amount until the end of the term, the total the insurer will pay out reduces over time, so this is a cheaper product.