Over 50 Life Insurance - What are your options
You don't have to be over 50 to consider life insurance but it can act as a reminder to start evaluating your options.
So what are your Life Insurance options?
The first point to note is not all life insurance policies are the same. Choose wisely you can save money and your family will be financially compensated in the event of your death. Choose poorly and you could end up with a policy which is poor value for money.
Here's a tip. Start your search with "term insurance". Simply explained, the insurer guarantees to payout the policy if you die within a certain time. However, no benefit will be paid if you survive to the end of the policy term.
Term insurance is the most affordable form of life insurance, with policies ranging from one year up to a few decades. Just remember life insurance cover for men tends to be more expensive due to age expectancy, and behaviour such as smoking will also increase premiums.
Some of the main types of term insurance are:
- Level Term Insurance
- Increasing Term Insurance
- Decreasing Term Insurance
- Convertible Term Insurance
- Renewable Term Insurance
Level Term Insurance
The policy is paid on death and the payout will remain the same throughout the term of the policy. At the end of the specified term the policy simply expires and has no value.
Increasing Term Insurance
Such policies usually increase by 5% a year or inline with inflation. This type of policy can be beneficial if you intend to insure for a long period, helping to prevent rising prices from eating away at your cover.
Decreasing Term Insurance
The opposite of an Increasing Term policy a Decreasing Term results in the level of cover falling each year until the policy reaches zero. This type of cover is mainly used to assist in the repayment of loans.
Convertible Term Insurance
Allows you to convert your existing term insurance policy into a whole of life or endowment policy. The beauty of such a policy is you cannot be refused a new policy based on the state of your health. However, you will incur higher premiums - usually 10% higher than basic policies.
Renewable Term Insurance
A renewable term insurance policy allows you to renew your existing policy at its expiration. Much like convertible term insurance you will be able to renew your policy irrespective of your state of health. However, some policies may not be renewal if you're over a certain age at time of renewal, for example over 65 years.
Other types of life insurance policies
Whole-of-life policies provide the policyholder with cover for their entire life, rather than a fixed term. The policy will only be paid out in the event of death with the beneficiaries receiving a lump sum.
Depending on the policy, policyholders may need to make ongoing contributions for the life of the policy, or the payments may cease once the policyholder reaches a certain age. Typically, contributions for whole-of-life policies are investment based, and future benefits may fluctuate depending on the performance of the investment.
It's also worth noting that such policies tend to have review dates. The insurer will compare the value of your policy with the benefits it's expected to provide. This can result in the insurer asking policyholders to increase their contributions. Alternatively, the insurer may leave the contributions at the same level if they are satisfactory.
How much life insurance is needed?
A good rule of thumb is buying a life insurance policy worth about seven times your yearly income. So if you make £25,000 a year, an insurance policy of £175,000.
How much does life insurance cost?
The cost of life insurance depends on a number of factors:
- Your age
- Your sex (male tend to pay higher premiums)
- Your health
- Behaviour such as smoking
- What kind of life insurance you choose
- The insurer you purchase the policy from
What to do next
Your best starting point is with a life insurance comparision website such as BeatThatQuote.com.
BeatThatQuote.com will do the running around to find you the most affordable life insurance deal. By searching the market on your behalf they will more than likely secure a cheaper price than you trying to purchase life insurance directly from an insurer. They provide no obligation free advice through FSA regulated advisors who specialise in life insurance.
For a free quote complete BeatThatQuote's online form which will take no longer than a minute - BeatThatQuote Life Insurance
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