Life insurance is something that most of us get when we suddenly discover we have financial responsibilities.
There’s a home to pay for, a partner, and perhaps a family on the way. We want to ensure that the income we provide for them now could still be there if we were no longer around to provide it ourselves.
This may happen in our 20s or early 30s. Cash may be in short supply, but the peace of mind life assurance policy provides makes the monthly payment money well spent. We may even be able to congratulate ourselves on getting cover at a bargain price if we start it young enough.
Then we tend to forget about life cover. But to keep costs down, we probably chose term insurance. This is a policy which lasts for a set time, often until we have paid off the mortgage, or until we retire.
This type of policy will eventually run out, but with your mortgage paid and a pension in place, you may no longer need the cover that was vital when you were younger.
So why would you want to take out a new policy when you are over 50?
Life Assurance. Not insurance.
Term cover is ideal for affordable protection you need as you start out in life. But because it will expire, it will leave you without the security for your family that you have grown used to.
Life assurance and life insurance are two different types of policies. Life insurance covers you for a set term, whereas life assurance covers you for your whole life.
It’s time to think about life assurance. Like life insurance it pays out a tax-free sum to whoever you choose when you die. However, life assurance usually covers the policyholder for their entire life – so it’s also known as ‘whole of life’ cover.
As time goes by you might be better served by whole of life cover – cover that will not run out with a guaranteed payment for those you leave behind.
Why have it?
Your insurance needs will change as the years go by – but you probably still want to provide for those you leave behind. In your 50s you probably need a different type of policy than the one that was ideal in your 20s.
You may have paid off your home, and the family grown and hopefully with a full pension pot you may feel that that you have the financial security you need. But if you left behind a partner, could you be certain they would be able to call on the cash they needed?
An over 50 policy would mean:
- Less strain on your family’s finances – one less worry for them at a difficult time.
- Help with funeral costs. Some people plan their payout to go towards arranging their final send-off.
- More cash available for care, for those you leave behind.
- You could arrange a policy that would take care of any Inheritance Tax liabilities, removing the risk of your loved ones having to share the money you leave them with the taxman.
- You could ensure your loved ones can continue to have the financial security you have given them in the past.
The policy that is right for you
If you want to be sure that a lump sum will be paid out to your loved ones no matter when you pass away, you might want to consider a life assurance policy.
There are many different life assurance policies available, and with many you will not need a medical – although you will need to disclose any medical conditions you know about. Some will even provide free cover, with no more premiums to pay after you pass a certain age.
To find out more, and compare policies from various insurers, you need independent expert advice. To get it, simply call us at Continuum.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable Protection products you should seek independent financial advice before embarking on any course of action.
The Financial Conduct Authority does not regulate taxation advice.
