So you’ve hit the Big 50 which immediately makes you eligible to consider an over 50’s plan. Great! Insurance without the hassle of lengthy forms and no prying medical questions!
Nice and simple.
But possibly expensive and with less cover available than other options.
The two options being looked at here are:
Over 50 plans
The idea of an over 50 plan is to provide life cover until you die, whenever that may be.
It is not medically underwritten so acceptance is usually guaranteed.
Key points to be aware of:
- Cover is usually restricted to a pre-set maximum amount (usually 10’s of thousands).
- The ‘sum assured’ (amount of cover) is often fixed
- There is often an ‘exclusion’ period during which the policy will pay less than the cover is actually for.
Whole of Life Cover
The idea of a Whole of Life policy is to provide life cover until you die, whenever that may be.
It is medically underwritten so acceptance is not guaranteed. In the event of serious medical conditions cover could be refused or the price could go up.
Key points to be aware of:
- Cover may be restricted but the maximum may be in the 100’s of thousands.
- The ‘sum assured’ can be fixed or can increase with inflation
- There are no ‘exclusion’ periods (except possibly suicide in the early years).
- Any medical conditions not disclosed at time of applying could void the policy.
There are similarities and also fundamental differences.
And then there’s the cost.
The main appeal of an over 50’s plan is that they are not medically underwritten and acceptance is usually guaranteed.
If there are medical conditions this can be the deciding factor but ‘Whole of Life’ cover can be MUCH CHEAPER so if you don’t know for certain if a medical condition will cause a problem, speak to an adviser about it before going down the Over 50’s route.
A lot of people over 50 take medication for minor conditions and sometimes the medication is preventative only.
If a condition is minor or is very well controlled (i.e. cholesterol or blood pressure) it might not have any effect on the cost or the availability of a Whole of Life policy.
An example of cost:
Eg. Female (let’s call her Mildred), aged 54, non-smoker, no medical conditions to speak of wants £10,000 of cover.
Whole of life policy = £12.83 (Pruprotect)
Over 50’s plans usually ask how much you want to spend so I got a quote from Sainsbury’s (which is actually Legal & General) and used a monthly premium of £15.
Over 50 plan = £15 per month will buy Mildred £4,515 of cover.
So it costs more for less than half the cover you’d get from a Whole of Life policy.
By tweaking the monthly payment it would actually cost £31/month for £9,993 of cover from the Over 50 plan.
More than double the price.
So if Mildred lives to the ripe old age of 84 she will pay £6,541.20 MORE for the over 50 plan.
She would have paid a total of £11,160 for £9,993 of cover.
With the Whole of Life cover she would have paid £4,618.80 for £10,000 of cover.
Even if Mildred is taking cholesterol medication and blood pressure tablets to keep everything nicely controlled she’ll probably pay exactly the same price as someone who isn’t.
To reiterate, if there are no medical conditions or if they are minor or well controlled, a Whole of Life policy could save someone thousands!
What if Mildred needs £50,000 of cover?
- Sun Life has a maximum of £25,000
- Sainsbury’s (L & G) maximum premium of £50 would buy Mildred £16,597 of cover
- Asda (LV) has a maximum of £25,000
- Aviva with maximum premium of £50 would buy Mildred £17,023 of cover
Just not enough….
An over 50 plan could cost more and be restricted by the amount of cover available.
If someone does have a serious medical condition then it could be the only option but beware the exclusion period!
Sun Life & L&G have a 2 year exclusion period whereby if a policy holder dies within the first 2 years due to natural causes the total amount paid in the event of a claim will be 1.5x the total of the monthly premiums paid to date.
LV has a 1 year exclusion period.
If Mildred, aged 54 dies from natural causes after 10 months the payout could be 1.5x the total of the premiums paid = £31 x 10 = £310 x 1.5 = £465
If she has an equivalent Whole of Life policy the payout would be £10,000.
Don’t rush into an over 50 plan.
Speaking to an adviser about the options could save £1,000’s