Life insurance isn't just for the young. Age groups like the over 50s, 60s and 70s can still apply for life insurance.
Although a lot of the focus when it comes to selling life cover is on protecting newlyweds, young families and their mortgages, this type of cover has much to offer older people and pensioners.
Reasons for taking out life insurance
People in their twenties and thirties are often urged to take out life insurance policies to make sure that their loved ones do not suffer financially in the event of their death.
For example, when you take out a mortgage, your bank or building society will invariably try to sell you life cover so that your dependants could keep the family home if the worst happened to you, and they could no longer afford the repayments.
These issues are much less likely to apply to those who have retired.
But life insurance can offer more than this: for example it can guarantee you leave an inheritance when you die.
Guaranteeing your legacy
One of the most important financial concerns for pensioners is whether they will be able to leave an inheritance to their families.
Current economic problems are making this a more relevant issue, as more and more older people are forced to use the equity in their homes – which would traditionally form the central part of any legacy – to supplement their pension incomes, or help cover the costs of long-term care.
This is where life insurance comes in: it is possible to set up a policy that is guaranteed to provide an inheritance when you die, irrespective of whatever assets you own at that time.
A life insurance payout can also help your family meet any inheritance tax bill that could be liable on your death, without them being forced to sell the main residence or other assets to raise the necessary cash.
Choosing a life policy
Life policies are frequently taken out in parallel with a specific time period. For example, it may match the term of a mortgage, or the time it takes for children to grow up.
These types of policy are referred to as term insurance. Put simply, when the term expires, the policy ends.
For those who’ve retired and are eager to take out a policy that’ll contribute to the inheritance they leave, whole-of-life cover is likely to be more appropriate. This is a different kind of policy.
Given the potential benefits of life insurance for pensioners, an increasing number of insurance firms are now tailoring whole-of-life policies specifically to those at this stage of life.
Due to this competition, cheap life insurance is now much easier to come across.
These policies have a tendency to be aimed at those aged from 50 to 80/85. Often no medical examination is needed before acceptance. That said, there may be a ‘qualifying period’ over, say, 12 months. That means the policy won’t pay out the full sum if you die within a year of it being established.
The monthly payment you make is usually guaranteed not to change. Although it’s worth remember that the lump sum payable on death is also fixed. That means it could potentially fall in value against inflation.
Policies aimed at this life stage may also include help with the cost of a funeral.
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