What is over 50s life insurance?
Over 50s life insurance is a type of whole of life policy designed specifically for people aged 50 to 80. Its key selling point is guaranteed acceptance — you cannot be turned down regardless of your health, and there are no medical questions to answer or examinations to attend.
These plans pay out a guaranteed, tax-free lump sum when you die. The money is typically used to cover funeral costs, leave a small inheritance, or help family members with financial expenses. Premiums are fixed for life and will never increase.
How do over 50s plans work?
The structure of these plans is straightforward:
- You choose a monthly premium you can afford (typically £5 to £50 per month)
- The insurer tells you the guaranteed payout amount based on your age, sex, and chosen premium
- You pay the same premium every month until you die or reach a maximum age (usually 90), after which premiums stop but cover continues
- When you die, the insurer pays the guaranteed lump sum to your beneficiaries
The waiting period
Most over 50s plans include a moratorium period — typically the first 12 to 24 months of the policy. If you die during this period from a cause other than accidental death, the insurer will not pay the full lump sum. Instead, they will refund all premiums paid, sometimes with interest added.
After the waiting period ends, the full guaranteed sum is payable regardless of the cause of death.
Key point: Accidental death is usually covered from day one. The waiting period only applies to death from illness or natural causes.
How much do over 50s plans pay out?
Payout amounts are relatively modest compared to standard life insurance. The exact amount depends on your age when you start, your sex, and how much you pay each month. As a rough guide:
- A 55-year-old paying £20 per month might receive a guaranteed payout of around £5,000 to £8,000
- A 65-year-old paying £20 per month might receive around £3,000 to £5,000
- A 75-year-old paying £20 per month might receive around £1,500 to £3,000
The older you are when you start, the lower the payout for the same premium. This is because the insurer has fewer years of premium income before they expect to pay the claim.
The critical question: could you pay more than you get back?
This is the single most important thing to understand about over 50s plans. If you live for a long time after taking out the policy, you could end up paying more in premiums than the policy will ever pay out.
For example, if a 55-year-old woman pays £25 per month for a guaranteed payout of £6,000, she will have paid £6,000 in premiums after 20 years (age 75). If she lives to 90, she will have paid £10,500 in total for a £6,000 payout. Many plans stop collecting premiums at age 90, but the crossover point — where premiums exceed the payout — typically occurs after 15 to 20 years.
Warning: With most over 50s plans, if you live beyond a certain age, you will pay more in premiums than the guaranteed payout. Always check the breakeven point before committing.
Pros of over 50s life insurance
- Guaranteed acceptance — no medical questions, no health checks, no risk of being declined
- Fixed premiums — your monthly payment never increases
- Simplicity — easy to understand with clear terms
- Guaranteed payout — the sum assured is fixed and will definitely be paid
- Peace of mind — knowing your family will receive something when you die
- No cash-in value worries — you know exactly what your family will receive
Cons of over 50s life insurance
- Expensive per pound of cover — you get far less cover per pound spent compared to standard life insurance
- Risk of overpaying — premiums can exceed the payout if you live long enough
- Waiting period — no full payout for the first 12 to 24 months
- Low payouts — typically between £1,000 and £25,000, which may not cover all funeral costs and final expenses
- No surrender value — if you cancel, you get nothing back
- Inflation erosion — the fixed payout loses purchasing power over time
Alternatives to over 50s life insurance
Standard whole of life insurance
If you are in reasonable health, you may qualify for a standard whole of life policy. These require medical underwriting (health questions and possibly a GP report), but they offer significantly more cover for the same premium. Even with minor health conditions, you may get a better deal than an over 50s plan.
Term life insurance
If you only need cover for a specific period — for example, to protect a mortgage or provide for dependants until they are independent — term insurance is dramatically cheaper. A healthy 55-year-old could get £100,000 of 20-year term cover for less than the cost of an over 50s plan paying out £5,000.
Funeral plans
If your primary goal is covering funeral costs, a prepaid funeral plan might be more appropriate. These lock in today's funeral prices and guarantee a specific level of funeral service. However, the funeral plan industry has had regulatory issues, so make sure any plan is FCA-regulated.
Savings
If you are in good health and have time, simply saving the equivalent monthly premium into a savings account could build up more money than the guaranteed payout. The key advantage is flexibility — you can access the money at any time, and if you die early, whatever has been saved goes to your family.
When an over 50s plan makes sense
Over 50s life insurance is most suitable if:
- You have health conditions that mean you would be declined for standard life insurance
- You want guaranteed acceptance with no health questions
- You want a simple, predictable plan with fixed costs
- You specifically need a small lump sum for funeral costs or a modest legacy
- You have no savings and no other way to ensure funeral costs are covered
Get advice before committing
Before taking out an over 50s plan, it is worth speaking with a life insurance broker who can check whether you qualify for standard cover that offers better value. Many people assume they cannot get standard life insurance due to their age or health, but this is often not the case.
Nesto matches you with an FCA-regulated life insurance specialist who can compare all your options — including over 50s plans, standard whole of life, and term cover — to find the best solution for your situation. Get Matched Free to speak with a specialist today.