In most cases, no matter what your age, you will never be too old for life insurance.
But while there are a number of life insurance products available, probably the most important consideration is to make sure you buy cover that does what you want it to to do – you may not have a mortgage that needs covering but may want to leave a legacy for your loved ones, for example, or even to help towards funeral costs.
But first …
How much does life insurance cost?
Insurers work according to the fairly simple and straightforward principle of risk – the chance of their having to settle a claim following an insured event. The premiums you pay are designed to cover the insurer’s costs in meeting the claims made.
Life insurance is no exception, but here the calculation is based on the risk of your dying sooner than later – the sooner you die, the less you will have paid in monthly premiums, so the relatively more expensive is the claim the insurer needs to settle.
That principle informs the general rule that life insurance becomes progressively more expensive the older you get.
The older you get, typically the more life insurance costs
The Money Advice Service recognises that the cost of life insurance increases as you grow older, but points out that insurers also take into account a number of additional risk factors, such as:
- whether or not you are married
- your hobbies and pursuits – whether you engage in extreme sports, for example)
- your state of health – and a medical history on which your GP may be asked to comment
- if you are or have been a smoker
- your occupation – some jobs may put you at greater risk of dying young.
Over 50s life insurance – an important exception
An important exception to the above where your lifestyle and occupation influence the cost of cover is over 50s life insurance.
Over 50s life insurance is available whatever your circumstances. Acceptance is guaranteed, without the need for any medical or declaration of any other lifestyle choices – even if you have been refused life cover elsewhere or have a pre-existing medical condition.
In return for the payment of a monthly premium - which can start from as little as £3.70 a month so may be affordable for most people - an assured death benefit is paid to your beneficiaries when you die. The pay out amount will typically be in the £10,000-£20,000 range compared to traditional life insurance policies which can pay out well over £100,000.
Over 50s life insurance is described as whole of life insurance and premiums are paid every month for the remainder of your life (or, with some policies, until you reach the age of 90). There is an outside chance, therefore, that you may have paid more in premiums than the policy eventually pays out.
Of course, your age does apply, even when buying over 50s life insurance. The cost of the monthly premiums is determined by the amount of the guaranteed benefit upon your death and your age. The older you are, the fewer years you have to cover the cost of the insurer’s payment of the assured death settlement you chose.
Too old for cover?
The basic rule of life insurance continues to apply, therefore – the older you are when the cover starts, the more expensive premiums. But it is rare indeed for you to be too old for life insurance.
Over 60 life insurance, for example, continues to be available – and, for that matter, so does over 70 life insurance – although it may become progressively more expensive. Different insurers have different upper age limits and these range from your lower 70s up until around the age of 85 (but there are some that continue to sell over 50s life insurance right up until the age of 100).
Effectively, therefore, you are never too old to consider life insurance. And that helps to underline one of the main reasons for many people buying it as a form of funeral insurance – as the Association of British Insurers (ABI) also calls this life insurance product.
Whatever your age, whatever the cost of the premiums, the assured death benefit of a simple and straightforward, guaranteed acceptance, over 50s life insurance policy may be used pay for, or help to pay, for your funeral arrangements. This form of funeral insurance therefore saves your loved ones from having to meet that expense in the time of their grief and mourning.