If you’re over 60 yrs old and looking at a life insurance policy it can be a bit of a minefield. Do you go for Level Term, Over 50’s or a Whole of Life policy?
We have seen a drastic increase in the number of enquiries from individuals aged over 60 looking for an over 60’s life insurance policy. The reasons for this are varied and include funeral cover, protection for a mortgage and estate planning to name a few.
There are a few preconceived assumptions about life insurance for this category of age group that we felt was worth writing about to try and dispel some of the more common misconceptions, and help you find the best value policy possible.
There are many forms of life insurance or to use the correct terminology life assurance. It can become confusing with all the different product names out there, but in essence, anything that pays out in the event of a death is a life assurance policy regardless of if it is referred to as a level term assurance policy, a whole of life policy or an over 50’s policy for example.
A term assurance policy pays a tax free sum out if there is a claim made within the predetermined term of the policy. You can choose a level term assurance policy so that the sum assured remains the same throughout the policy or on a decreasing term assurance policy so that the sum assured reduces over the plan term so that it is always enough to clear and outstanding repayment loan or mortgage balance. The latter being the cheaper of the two options. A term assurance policy is subject to a health and lifestyle questionnaire before any terms of insurance will be offered by the insurer.
Whole of Life
A whole of life policy is not restricted to a pre-determined term of years, but is general more expensive on a month by month basis than a term assurance style policy. In short, once the policy is set up, so long as you continue to pay your premiums, you continue to be covered. As with term assurance, whole of life policies are also subject to a health and lifestyle questionnaire before any terms of insurance will be offered by the insurer.
An over 50’s type policy, as the name suggests is available to people who are 50 years old or more, usually up to a maximum age, for example 80 (although this can differ depending on the provider). The significant advantage many see of this type of life assurance is that, unlike term assurance and whole of life policies, there are no medical questions to answer. There for this policy is an option to people who may otherwise be declined for other insurance products due to health conditions. As a result of the increased risk to the insurer, this is often the most expensive option meaning you will either pay more for the sum assured you require or be offered significantly less cover for a monthly premium you wish to spend.
So bearing in mind the above, here are a few things we wanted to clarify that it seems people are not always fully aware of when considering their options.
Firstly, don’t make the assumption you will be declined for a term assurance or whole of life style policy if you have some pre-existing medical conditions or are currently taking prescription medication to manage a condition.
Common examples here include people who are taking medication for raised blood pressure and or raised cholesterol. It is often the case that with these conditions if a person is taking medication that manages the issues back to an acceptable level, they are offered cover from an insurer on the same basis as a person who is not taking any such treatment. Therefore, rather than assume you need a ‘no questions asked’ type policy, it may be worth firstly exploring other options with your broker.
Secondly the term a policy can be taken up to is often not fully understood. A whole of life policy, as stated above, runs indefinitely, however, it can be a more expensive option. Term assurance policies can be taken up until an individual is 90 years of age which far exceeds the average mortality rates for both men and women in the UK. By considering this as an option a person may be able to save money on their monthly premiums or indeed get the level of cover they require rather than compromising because of the cost.
Following on with the subject of cost there are also some things worth knowing. Firstly, the trend for life insurance across the industry over the last few years is that the cost of premiums has been going down. Do not automatically assume the premiums will be unaffordable; get a whole of market quote to consider your options. Here at I’m Insured, we have the ability to discount premiums meaning that we can reduce the cost of a standard price to below that of what a provider may offer direct.
In summary, the message is it’s worthwhile fully exploring your options before you either write something off as an option or decide it will be too expensive without checking first. Why not challenge us to find the option that you think best suits your needs and indeed your budget?
If you wish to talk over your options with one of our experienced consultants, please use the ‘talk to us’ form below, or alternatively the ‘compare online’ button to compare the cost of a term assurance policy online.