Over 60s Life Insurance

I shouldn't think that there are many of who really want to think about our own departure but the death rate in Britain is still 100%; every single person who is born here eventually dies!

On that happy note, let's take a look at life insurance.

First: How should you buy it?

We are bombarded with TV ads about "Over 50s life insurance". However; heavily advertised UK life insurance companies that claim to provide it without medical examinations or health declarations often offer poor value for money because these policies are typically more expensive; and offer less cover; than policies that ask a few more questions.

Why can it be poor value?

When an insurance company offers a policy without a medical examination, they are taking a big risk; after all they are insuring individuals without a full understanding of their health status!

To compensate for this increased risk, the premiums for these policies are often much higher than those that require a full checkup.

To add insult to injury, as well as higher premiums, policies without medical examinations may also offer less cover than those that require examinations; for example, they may have lower cover limits, higher exclusions, or longer waiting periods before benefits are paid out. These limitations can significantly reduce the value of the policy, making it a poor choice for many individuals.

In addition, insurance companies that offer policies without any medical examinations often use broad underwriting criteria. What does that mean? Well, they may not consider the unique health risks and factors of each individual. And we are all different, aren't we? Consequently, people who keep themselves fit may end up paying higher premiums than they need to; whilst those with perhaps serious conditions may end up with less cover than they really need.

Why should you subsidise people who should, really, be paying much higher premiums? Oh, and one last thought; TV ads are expensive. Who do you think pays, in the end, for these mass advertising campaigns?

So are these policies a complete waste of money?

No, not necessarily! Policies without medical examinations can be an attractive option for people who don't want to go through the hassle of making health declarations, or even taking medical exams. They can be particularly attractive to those who have pre-existing health conditions that they would prefer not to disclose, too (although bear in mind that there will inevitably be an initial 'no claim' period of a couple of years or so, before the policy comes into force. Die within this period and the payout will be precisely nothing).

However, these policies are often more expensive; and offer less benefits; than policies that require the applicants to state their medical history. So, would you be better off comparing policies, and getting advice, from qualified insurance brokers before making any decisions, to ensure that you are getting the best value for your money?

Would I have to have a medical examination, then?

Not necessarily: a simple declaration by you of the state of your health may be enough. If an insurer does want you to have a medical exam, they'll have a professional do it - usually a nurse or a doctor. You might be asked to go to your own GP or local medical centre.

The good news: the insurance company usually pays for the examination, so you don't have to. Getting a free checkup? Why not?

Now, even if a medical exam is necessary, and health issues come to light, that doesn't mean you're going to be rejected straight away. Certainly, the results may affect your policy's premium or cover, but most insurers have policies that cater to people with a wide range of health conditions. So; don't stress too much if you are asked to have an examination; even if there are issues you are still likely to offered cover.

Isn't buying insurance through a broker expensive?

In the UK, life insurance brokers earn their keep by means of commission paid by the insurance companies whose products they market. When a customer buys a policy via a broker, the insurance company (almost invariably) pays a commission to the broker, often a percentage of the policy premium, subject to the insurer's discretion.

The amount of commission that brokers receive may vary, depending on the insurer and the policy in question. Whilst in some cases it may be a one-time payment, in others, it may accrue over time, provided that the premiums continue to be paid. If an advance payment is made, and the customer stops making the payments; the insurer can usually snatch back the commission; a great incentive for the broker to suggest the best value policy in the first place!

Some brokers might; just might; make a charge for their services, which may be either a flat fee or a percentage of the policy premium. However, this is not commonplace; and is usually reserved for more intricate or customised policies. If a charge is made, the customer has to be informed of how much is being charged, and why.

It's well worth bearing in mind that the commission paid to the broker by an insurance company does not affect the price of the policy for the customer. Irrespective of whether the customer gets the policy directly from the insurer or via a broker, the policy cost remains unchanged. The advantages of engaging a broker is that they can offer advice on the diverse range of policies available, and help in choosing the policy that best fits the customer's needs (and pocket!).

OK, so what sort of life insurance is available?

In the United Kingdom, a wide range of life insurance policies are available to cater to the different needs of individuals and families. These include:

• Term life insurance: this policy is the most widespread variant and provides cover for a specific duration, typically ranging from 1 to 30 years. Should the policyholder pass away within the term, the beneficiaries receive a payout. If the policyholder outlasts the term, the policy terminates without any further benefits.
• Whole life insurance: As the name suggests, this policy extends cover for the entirety of the policyholder's life, subject to regular premium payments. The policy accrues a cash value over time, which may serve as collateral for loans or fund retirement.
• Endowment policies: These policies amalgamate a savings plan with life insurance cover. Regular payments into the policy build up over time, resulting in a lump-sum payout to the beneficiaries if the policyholder dies within the policy term. If the policyholder survives the term, the savings component of the policy pays out a sum.
• Critical illness insurance: This policy offers cover in the event of the policyholder's diagnosis with a critical illness such as cancer or heart attack. If the policyholder receives a diagnosis for a covered illness, they receive a lump-sum payout that can be utilised to fund medical expenses and other associated costs.
• Over 50s life insurance: This policy is a type of whole life insurance plan created exclusively for individuals above 50 years of age. The policy guarantees a payout upon the policyholder's death and usually necessitates no medical examination.
• Family income benefit insurance: This policy offers a regular income to the policyholder's beneficiaries upon their death, rather than a lump-sum payout. This can be a good choice for families that are reliant on the policyholder's income to meet their day-to-day expenses.

Each of these life insurance policies is distinct, with unique features, costs, and benefits. They might sound complex at first (perhaps that's an understatement!) but a good broker can help guide you through the different choices and help you to look for the best value.

So why not get quotes now? Unlike most things in life, advice is most probably free!