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Do I need over-50s life insurance or can I take out any policy?

I’m 52 and have £50k left on my mortgage and want to cover that and get a pay out in case I die early, but do I need over-50s life insurance

I am 52 and have decided that I need to get some life insurance to cover the rest of my mortgage and pay out to my family if I die early.

I have had a look around and seen lots of over-50s products. Is there anything that makes this kind of life insurance better for someone over 50 or could I just take out any life insurance.

We have about £50,000 left on our mortgage which will be paid off in the next six years and I would like the insurance to cover that and also pay out some money if I die at any age before 65.

Over-50s can get bombarded with life insurance products advertised on TV and leaflets that pop into the letterbox, but can they take out any policy?

Angelique Ruzicka of This is Money says: With less time left on a mortgage some people may feel tempted to take a chance and do away with the need for life cover, so it’s a good thing you still consider this to be an important product.

You can take out any policy but there are also lots of over-50s products on the market. They can be worthwhile in some cases, but can also prove expensive and may not cover what you need. 

Here, two experts explore the potential options for people in your position.

David Vickery, insurance adviser Cavendish Online, says: While one of the obvious differences between the over-50s policies and more traditional life insurance is that over-50s plans are targeted at those aged over 50, the other big difference is that over-50s plans ask no medical application questions, so they’re a great option if you have health conditions or are struggling to get fully underwritten life insurance. 

You’re essentially guaranteed to be accepted by the insurer if you’re in the right age bracket. This is one of the big selling points of over-50s cover.

The downside of this approach though is that often, over-50s plans are more expensive than traditional life insurance for healthy people. 

So, if you’re a healthy 52-year-old, you may find that a term life insurance policy could work better in terms of protecting your mortgage. 

David Vickery of Cavendish Online says  the downside is that over 50s products  are more expensive than traditional products

David Vickery of Cavendish Online says  the downside is that over 50s products  are more expensive than traditional products

This is especially true given that over-50s policies can be quite restrictive because the maximum cover amount is often capped at around £25,000. 

So, it’s unlikely that you’d be able to get the desired level of cover of £50,000 to protect the mortgage with an over-50s policy.

It’s also worth knowing that these policies often come with a period of exclusion. 

So, if you pass away in the first one or two years, you wouldn’t receive a full payout, instead your policy would pay a smaller benefit (typically a multiple of the premiums paid). The exception to this would be if you were to die from an accident.

Based on what you’ve told us, I would suggest looking at two separate life insurance policies. One on a decreasing term basis for the remaining balance of your mortgage over six years, and then a separate level term insurance policy to cover you for an amount until you reach age 65. This would provide you with a more balanced and appropriate level of cover.

Ben Burgess is a senior adviser at LifeSearch, adds: ‘The amount of cover offered by these [over-50s] policies is usually relatively low, typically a few thousand pounds, although funerals may cost far more. 

With traditional cover you can choose any amount of cover according to the budget you have.

You may end up paying more into the policy than your family would get out of it, especially if you live for a very long time. With traditional cover this is not the case as the price is matched to the individual, as opposed to everyone paying the same.

If an income would be more suitable than a lump sum, there’s a policy known as ‘family income benefit’ ‘which pays a yearly amount instead of a one-off lump sum for the remaining length of the policy.

Or, if you need the policy to guarantee to pay out regardless of when death may happen, there are underwritten ‘whole of life’ policies, although these will be more expensive because they will definitely pay out, whereas ‘term’ assurance only pays out if you die before the policy ends.’

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