Saturday, October 22, 2011

Why Is Over 50’s Life Insurance Different?

Universal Life Insurance CompanyImage by Thomas Hawk via FlickrIn some respects, over 50’s life insurance isn’t much different from other forms of life cover – it exists to offer you and your family a degree of financial protection should the worst happen.

Yet in other respects it may be – and those differences relate to the typical nature of people’s lives, as they get older:

  • If you are in your younger years, perhaps with a young family and a heavy debt burden (mortgage etc), then you may typically be looking for a different profile of life cover than someone who is older and with perhaps less extensive long-term financial commitments;
  • By contrast, if you are over 50, you may incline towards a form of policy that you know is open-ended, in other words, it will pay out a fixed sum upon your death, at whatever age you die;
  • Someone younger and with a larger debt profile to cover, may require a larger sum insured but one which is only in effect for a number of years (called the term of a policy and something that may typically be seen running in parallel with a mortgage);
  • Over 50’s life insurance that is unconstrained by a term, is sometimes referred to as whole life cover or traditionally, life assurance, as assurance is against something that you know will happen eventually whereas insurance is cover for something that may happen in the future;
  • Nobody can really decide what form of over 50’s life insurance would be suitable for you – only you can decide that having carefully reviewed your financial position and that of those you care for, however, it may be prudent to keep in mind just how expensive things such as funerals may prove to be;
  • Unfortunately, death isn't the only thing that you may need to worry about – if you are still responsible for supporting your family through income earning, then something such as critical illness may deprive you of the ability to continue working, so it might be sensible to consider loss of income cover insurance at the same time;
  • In our modern society, increasing numbers of people are living and working longer and that is something that implies that they may have longer-term financial commitments than was the case for the over 50’s of previous generations - that may be another reason why it may be sensible to look further at your options for over 50’s life insurance.

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