When we are younger or have a young family, life insurance is seen as an absolute necessity which can protect and safeguard our loved ones should the unthinkable happen to us. But as we get older, many of us may question whether life insurance remains a necessity at all. Are those monthly premium payments merely a waste of time now that the children are grown up and the mortgage is paid off? Would that money be put to better use enjoying life now? Here, we examine whether those over 60 should be re-evaluating their life insurance needs.
What is life insurance for?
Life insurance is a way of making sure your family is financially protected and looked after if you pass away. It can give you and your loved ones peace of mind that they will be financially secure should the worst happen. Money paid out from a life insurance policy can be used for many different purposes including household bills, mortgage repayments, for children’s educations and future homes, to cover the earnings of the deceased or to pay for a funeral.
There are many different types of life insurances. The main types are: –
-Term life insurance
This allows you to choose the amount you want to be insured for and the period you want to cover. If you die within that period of time, the policy pays out. If you outlive the term, the policy ends. There are three main types of term life insurance- decreasing term, level term and increasing term. In level term insurance policies, the amount your loved ones would receive remains the same regardless of what point in the insurance term you pass away. A decreasing term life insurance payout gets smaller over course of the policy period. This kind of insurance policy is often set in line with a mortgage to ensure this can be paid off if the policyholder should pass away. In contrast, increasing term life insurance sees the payout amount rise as the policy continues.
– Whole of life insurance
Whole life insurance policies last throughout your whole lifetime and pay out whenever you die. Often, these types of insurance policies are more expensive because a payout is guaranteed at some point. They are essentially insurance for life.
-Family income benefit
One of the lesser-used insurance types, a family income benefit pays a monthly or annual income to the beneficiaries if the policyholder passes away during the term of the policy. This can be a way to look after children and their lifestyles until such a point that they can become financially self-sufficient.
When do most people get life insurance?
Life insurance can be bought at any time from the age of 18 to 90. There is no set age at which people take out their first life cover but there are certainly key events that may prompt the decision. Many people take out life insurance when they become parents and now have dependents who they want to make sure are financially looked after should a parent pass away at a younger age. Recent figures reveal the cost of raising a child to 18 is £202,660, which would clearly be a huge burden if left to just one surviving parent or family member .
Another catalyst for taking out life insurance is buying a home and taking on a mortgage. Getting a suitable life insurance policy in place, usually a decreasing term one, can mean your mortgage payments will be looked after should you pass away. If a mortgage is not paid, then ultimately it can lead to a home being repossessed and your family forced to move.
The different types of life insurance policy listed above are suitable for different purposes and distinct stages in your life. There is no perfect age at which you should get life insurance but there are certain life events and situations that make it more of a priority.
So, now I am over 60, what kind of insurance life cover should I have in place?
When you get to 60 and over you may very well ask yourself this question. In most cases, people take out life insurance to cover the term of their working life and by the age of 60 plus, many people have retired or are at the point of retirement. By this time, children have usually grown up and flown the nest and it is likely that mortgages could have been paid off by now. Add to this the fact that life insurance gets more expensive as you get older and you may wonder whether you should still have life insurance in place or should you look for a new policy?
However, you need to look at your individual circumstances rather than your age to determine what life insurance policies would be good for you once you hit 60 and over. You need to assess your own personal situation – do you still have dependents at home? Do you still have a mortgage in place? Do you have outstanding bills and credit card debts you do not wish to pass on to your family?
You may simply want to have life cover in place in order to leave behind a small gift or inheritance for your family upon your death. You may want to ensure a smaller outstanding debt will be covered. Another thing people may turn their attention to more as they get older is the cost of a funeral. The average cost of dying, including a funeral and other related fees, is £8,864 . For many families, this can be a difficult expense to suddenly have to cover. Many people like to take steps to make sure this is all taken care of to avoid any extra stress and anxiety for their grieving family. It can also give you peace of mind too. One way to financially cater for a funeral is through life insurance for the over 60s.
Over 60 life insurance
Increasing numbers of insurers are now offering over 60s life insurance. Over 50s life insurance policies are also available and there are usually very little difference between the two. Life insurance over 60s policies are, as the name suggests, dedicated policies aimed at people over the age of 60. It can be reassuring to know such policies are available as many others, not specifically aimed at the age group, can be extremely expensive once you reach 60 and over.
What are the advantages of over 60s life insurance?
The main benefit of over 60s life insurance is that it usually comes with ‘guaranteed acceptance’. This means that any UK resident aged between 50 and 85 will be able to get cover regardless of medical history and current medical status. No medical questionnaires are needed and you will qualify for cover regardless of your health.
Most often, life insurance for over 60 is a whole of life cover which will last you for the rest of your days. As long as payments have been made each month and your cause of death is listed within the policy terms, it will leave your family with a tax-free lump sum. Providers and policyholders will agree a fixed premium amount and some providers may even allow you to stop paying premiums after a certain age (usually 85+).
What are the disadvantages of life insurance for the over 60’s?
A key disadvantage of over 60s life insurance is that many providers have a qualifying period of one or two years, which means they will not pay out if you die within that time although your premiums may be reimbursed.
The lump sum paid out is a fixed amount regardless of when you die. This means the amount can be severely affected by inflation over time.
Such insurance policies also tend to be much lower in value than level or decreasing term policies, with maximum payouts of around £25,000. This makes them ideal for contributing towards funeral costs and other immediate expenses, as well as smaller debts.
Life insurance for the over 60s can usually only be taken out as a single policy, not in a joint policy with a partner.
How much will over 60s life insurance cost?
If you’ve been searching for ‘life ins’, Free Price Compare can help you to find the best over 60s life insurance deals for you. Simply enter your details into our online tool and within seconds, you will have access to the best deals around from a whole host of reputable providers, so you can find the perfect one for you.
While life insurance over 60 is guaranteed despite your medical status, there are still some factors which determine the cost of your monthly premiums. These include:
Your age- premiums tend to rise as you get older
Your lifestyle- factors such as whether you smoke and how much you drink can impact on your premiums
Lump sum- the more you want to leave to your family, the higher the premiums you will pay.
Can an over 60s life insurance policy be paid in trust?
In most cases, your over 60s life insurance policy can be placed in trust as a way of making sure that the cash sum goes to your beneficiaries without any delay. Your policy will need to have named trustees who are responsible for distributing the money to your beneficiaries.
Ultimately, it is always a good idea to re-evaluate your life insurance cover regularly. Experts recommend you should review the policies you have in place every year. With life insurance, there is no ‘one size fits all’ solution and no absolute rules as to when you should take out life insurance and what type it should be. Reviewing and re-evaluating your life insurance annually will allow you to respond and react to changes in your personal circumstances and adapt your policies accordingly.
This could be major life events such as taking on a bigger mortgage or having more children. However, as you get older, it is still important to evaluate your life insurance policies, remembering too that life expectancy is on the increase. Look at your personal circumstances and your own finances to determine what life insurance cover you need.
For many people, the financial pressures that were there when they first took out a life insurance policy (i.e., young children, a mortgage) will no longer be there when they reach 60+.
However, there may be other financial pressures such as debts or funeral costs that will still mean you want life insurance cover in place. Many people simply want to leave something behind for their families as a parting gift or to alleviate financial hardship and this is where over 60s life insurance comes in. Free Price Compare can help you to find the right deal for you.
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