If you want some cover in your older years, it’s important to choose your insurance carefully or you could end up out of pocket.

If your mortgage’s paid off, you’ve built up a decent savings pot for retirement and the kids are leaving home, you could argue there’s no need for life insurance anymore. But if your spouse or partner would face hard times if you died then you should still have a policy in place. Of course, the older you get, the more expensive life insurance becomes, as the likelihood of you dying increases.

If you’re over 50, the alternative to ‘traditional’ life insurance is an over-50s plan. But the two, despite often being sold as the same thing, are very different.

Over-50s plans

These have become more and more popular as not everyone wants to go through the details of their medical history to take out a protection plan – we know that some people find this awkward. If you are aged between 50 and 80, you will not be asked for any medical details or health history and you will not need to go for a medical.

They work quite simply: you pay a premium each month and when you die your beneficiaries will receive a payout. However, there is a catch with a lot of these policies, in that the payout is capped but your payments in aren’t. So, depending on how long you live, you could pay in far more than your loved ones will get out.

The benefit of an over-50s plan for some people is there are no medical examinations, so if you’re not in the best of health you can still get covered. You can choose the level of payout based on how much you’re willing to pay in each month. The payouts are much smaller than you would receive from an ordinary life insurance policy.

You should note that a claim won’t be paid out if you die in the first couple of years. (you are only covered for ‘accidental death’ during the first two years) Instead, your payments will generally be paid back to your family. And if you stop your payments before the end of the plan your money will be gone and you’ll get nothing in return.

What is accidental death?

For this plan, ‘accidental death’ means ‘death caused only and directly as a result of an accident caused by something violent, which can be seen and which is not linked to any other cause’.

Life insurance

By the time you reach your 50s, taking out a traditional life insurance policy is more expensive than if you’d done it in your younger years. You have a choice of two avenues, depending on your needs: level term or decreasing term.

Level term pays out a fixed sum in the event you die during the life of the policy, otherwise known as the term. This type of cover generally expires at a certain age, depending on who you buy it from.

Decreasing term, as the name suggests, decreases as the term goes on, so is suitable if you only want to cover something like a repayment mortgage, which will decrease over time.

Both will pay out far more than an over-50s plan and always more than you’ve paid in. However, you may need to undergo a medical examination before you can get cover and the cost of your monthly premiums will depend on your health.