There are a few milestone birthdays that may remind us of the need for life insurance, and a 60th is certainly high among them. But that doesn’t mean to say that 60-year-olds are considered old. Given advances in medical science people are living longer and longer*.
While few providers offer specialist life insurance for people over 60s, most have an over 50s policy that may tempt you when you reach the big six-o.
What is over 60s life insurance?
If you are considering an over 60s life insurance policy, the chances are that it won’t differ greatly from an over 50s one. Over 50s life cover is generally whole-life insurance, which differentiates it from fixed term cover as it is guaranteed to payout upon your death regardless of how long the policy is in place.
While term life insurance is in place for a pre-determined length of time, whole life – as the name suggests – lasts from the point at which you take out the policy until your death. If you’re seeking affordable life insurance for someone over 60, an over 50s policy might suit your needs.
This makes it an appropriate option for people who are entering the latter part of their lives and who want to make provisions for a time when they’re no longer around.
Because many specialist life insurance policies for over 60s are guaranteed and don’t require a medical, they do not offer payouts of the size of fixed term policies. Therefore most people take them out to help to cover funeral costs, to pay outstanding debts or to leave a gift for the next generation.
Why should I get over 60s life insurance?
Those in their 60s may still be in full-time employment and beginning to think about providing for their retirement. If you are over 60, you may want life insurance to cover the income you would have contributed to your family, to pay-off remaining mortgage payments, to help towards care costs or any other costs of living when you're no longer around.
That’s not the only reason people opt for this type of insurance though. Outstanding credit card bills or other minor debts might be covered by a payout, taking the financial responsibility off your loved ones.
An important advantage of the Post Office Over 50s life insurance is that you pay premiums for a specific length of time, but the policy runs until you die – even if that happens many years after you have completed your premium payments. Given the average size of over 50s and over 60s life insurance payouts, they are usually taken out to contribute towards funeral costs.
Fundamentally, this type of policy offers peace of mind. Provided you maintain your premiums, you will know the size of the payout your loved ones will receive. Knowing that it is impossible to outlive the term of your policy will also give you reassurance that your family may have some financial strain lifted when you pass away.
Can I use an over 60s life insurance policy to pay inheritance tax?
It is possible but unlikely that an over 60s life insurance policy will pay out enough to completely cover an inheritance tax bill.
According to HMRC regulation, inheritance tax is only due on estates valued at more than £325,000. The maximum payout for a Post Office Over 50s policy is £10,000. If you had the maximum amount of cover available and your estate was worth no more than £350,000 then a payout could cover the tax bill, however this will only apply to a small number of people.
Calculating the value of your estate is always a worthwhile undertaking as it will help you to determine what level of cover you need. In turn, you might decide that an over 60s policy is right for you, or you might opt for a fixed-term policy.
Do I need to have a medical to qualify for over 60s life insurance?
Life insurance with no medical simply means taking out cover and having no requirement to complete any medical checks. This will depend on the insurer, their policies and on certain health and lifestyle factors.
When applying for life insurance, the insurer will ask you a few questions regarding your health and lifestyle. It’s how you respond to these questions which may affect whether or not you require a medical examination.
Some policies accept applicants without a medical. For example there are no medicals needed for Over 50s Life Insurance with Post Office. If you are a UK resident between the ages of 50 and 80, you are guaranteed to be accepted.
What other types of life insurance are there?
The most relevant types of life insurance for someone aged over 60 years old are the three kinds of fixed term policy: decreasing, level and increasing.
Decreasing is designed to pay off a repayment mortgage or other long-term reducing debt. Level term and increasing term insurance policies offer set payouts which are decided when you take out your policy. The difference between the two is that increasing term payouts grow alongside inflation, so that the relative value of your payout remains the same over the course of the policy. However, increasing term policy premiums also increase annually, so this is something to factor in.
It’s important to bear in mind that these policies will involve a greater degree of medical scrutiny and for people over 60, the premiums for fixed term insurance are likely to be significantly larger than a healthy person taking out a policy at age 30.
Enjoying life over 60
Having an over 60s life insurance policy offers peace of mind that you are able to do what you can to support those you care about when you’re no longer around. To discuss your circumstances and get a quote, speak to one of our advisors on 0330 123 3947 or find out more about the benefits of Post Office Over 50s Life Insurance.
*Source: Life expectancy: recent trends in older ages, Public Health England, 2016