Life insurance for the over 50s

Retired manIf your mortgage's paid off, you've built up a decent savings pot for retirement and the kids are leaving home, you could argue there's no need for life insurance anymore.

But if your spouse or partner would face hard times if you died then you should still have a policy in place.
Of course, the older you get, the more expensive life insurance becomes, as the likelihood of you dying increases.

If you're over 50, the alternative to 'traditional' life insurance is an over-50s plan. But the two, despite often being sold as the same thing, are very different.

Over-50s plans
These have become more and more popular and are heavily advertised on TV and in newspapers.

They work quite simply: you pay a premium each month and when you die your beneficiaries will receive a payout. However, there is a catch with a lot of these policies, in that the payout is capped but your payments in aren't. So, depending on how long you live, you could pay in far more than your loved ones will get out.

The benefit of an over-50s plan for some people is there are no medical examinations, so if you're not in the best of health you can still get covered. You can choose the level of payout based on how much you're willing to pay in each month.

The payouts are much smaller than you would receive from an ordinary life insurance policy. Many providers try to mask this somewhat by offering a free gift when you sign up.

You should note that a claim won't be paid out if you die in the first couple of years. Instead, your payments will generally be paid back to your family. And if you stop your payments before the end of the plan your money will be gone and you'll get nothing in return.

But if you're in good health and still in your 50s and 60s, you're far better off looking for other ways to leave something behind or cover your funeral costs – such as an ISA. If it's just the funeral you want to cover, you could consider taking out a funeral plan.

Life insurance
By the time you reach your 50s, taking out a traditional life insurance policy is more expensive than if you'd done it in your younger years. You have a choice of two avenues, depending on your needs: level term or decreasing term.

Level term pays out a fixed sum in the event you die during the life of the policy, otherwise known as the term. This type of cover generally expires at a certain age, such as 65 or 70, depending on who you buy it from.

Decreasing term, as the name suggests, decreases as the term goes on, so is suitable if you only want to cover something like a repayment mortgage, which will decrease over time.

Both will pay out far more than an over-50s plan and always more than you've paid in. However, you may need to undergo a medical examination before you can get cover and the cost of your monthly premiums will depend on your health.

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Life insurance for the over 50s
Figures from charity Age UK show that 29% of those over 60 feel uncertain or negative about their current financial situation - with millions facing poverty and hardship. Even though saving for retirement is not much fun, the message is therefore that having to rely on dwindling state benefits in retirement is even less so. To avoid ending up in this situation, adviser Hargreaves Lansdown recommends saving a proportion of your salary equal to half your age at the time of starting a pension. In other words, if you are 30 when you start a pension, you should put in 15% throughout your working life. If you start at 24, saving 12% of your salary a year should produce a similar return.
Many older couples rely on the pension income of one person - often the man. Should that person die first, the other person can therefore be left in a difficult position financially.
One way to prevent financial hardship for the surviving person is to take out a joint life annuity that will continue to pay out up to 67% of the original payments to the surviving partner should one of them die.

The disadvantage of this approach, however, is that the rate you receive will be lower. Again, the Pensions Advisory Service on 0845 601 2923 is a useful first port of call if you are unsure what to do.

Around 427,000 households in the over-70 age groups are either three months behind with a debt repayment or subject to some form of debt action such as insolvency, according to the Consumer Credit Counselling Service (CCCS).

Its figures also show that those aged 60 or older who came to the CCCS for help last year owed an average of £22,330. Whether you are retired or not, the best way to tackle debt problems is head on.

Free counselling services from the likes of CCCS and Citizens Advice can help with budgeting and dealing with creditors.

Importantly, they can also conduct a welfare benefits check to make sure you are receiving the pension credit, housing and council tax benefits, attendance and disability living allowances you are entitled to.


The average UK pensioner household faces a £111,400 tax bill in retirement as increasing longevity means pensioners are living on average up to 19 years past the age of 65, according to figures from MetLife. And every year in retirement adds an extra £5,864 in direct and indirect taxes based on current tax rates to the costs for the average pensioner household. You can be forced to go bankrupt if you fail to pay your taxes, so it is vital to factor these costs into your retirement planning.It is also important to check that you are receiving all the benefits and tax breaks you are entitled to if you want to make the most of your retirement cash.

The cost of a room in a care home in many parts of the country is now over £30,000 a year, according to figures from Prestige Nursing and Care. So even if the prime minister announces a cap on care costs - last year the economist Andrew Dilnot called for a new system of funding which would mean that no one would pay more than £35,000 for lifetime care - families will still face huge accommodation costs. Ways to cut this cost include opting for home care rather than a care home. Jonathan Bruce, managing director of Prestige Nursing and Care, said: "For older people who may need care in the shorter term, home care is an option which allows people to maintain their independence for longer while living in their own home and should be included in the cap." However, the only other answer is to save more while you can.
Older Britons are often targeted by unscrupulous criminals - especially if they have a bit of money put away. For example, many over 50s were victims of the so-called courier scam that tricked into keying their pin numbers into their phones and handing their cards to "couriers" who visited their homes. It parted consumers from £1.5 million in under two years. Detective Chief Inspector Paul Barnard, head of the bank sponsored dedicated cheque and plastic crime unit (DCPCU), said: "Many of us feel confident that we can spot fraudsters, but this type of crime can be sophisticated and could happen to anyone." The same is true of boiler room scams that target wealthier Britons with money to invest, offering "once-in-a-lifetime" opportunities to snap up shares at bargain prices. Tactics to watch out for include cold calling, putting you under pressure to pay up or lose the opportunity for good, and claiming to have insider information that they are prepared to share with you.

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