Senior life insurance

What options are there for life insurance for seniors?

Your options for life insurance as you get older include:

Whole life cover

Whole of life insurance, often known as whole of life assurance, is designed to pay out when you die, no matter what your age. You select the pay-out amount at the outset, after which you pay a monthly premium. Providing you continue to pay the premium for as long as the policy states (usually up to age 80 or 90), the policy should deliver the pay-out to your family when you die. But this means this type of cover can be expensive.

Over 50s life cover

This type of cover, usually taken out between the ages of 50 and 80, pays out a modest lump sum to your dependents when you die. It can be used to help your family cover financial costs, including unpaid bills and funeral costs. One advantage of an over 50s life cover plan is that you’re guaranteed to be accepted – you won’t need to pass a medical or answer any health-related questions. Your premiums will also stay the same throughout the whole policy.

With many over 50s life insurance policies, you’ll need to keep up the payments every month or your family won’t receive anything, although some policies stop charging once you hit a certain age or have contributed for a set number of years. This does mean that if you live a long life, you could end up forking out far more for the policy than any pay-out after your death.

Life insurance for over 60s

As you move into your 60s, it's likely that dependent children are forging their own lives. You may have also reached the happy stage where your mortgage is paid off – and the matching life insurance policy has ended. So you may want to replace it with something more suitable for your current situation. An over 60’s life insurance policy could be the answer here. But if you still have dependents, you'll need to consider if this would offer adequate financial protection. If not, you might want to consider level term or whole of life insurance instead.

Life insurance for over 65s

Many people coming up to 65 are thinking about retirement. This gives you the chance to take an overall look at your finances and your insurance cover. It's worth considering life insurance for over 65s to see what benefits it could offer in terms of your financial situation as you grow older. You'll need to weigh up what you need as a pay-out against the cost of the policy, so it's worth considering all the life insurance options on offer.

One life insurance bonus for senior citizens is that some providers offer health and wellbeing advice that can help you make the most of your well-earned retirement.

Over 70s life insurance

As we age, our health may not be what it was when we were younger. The advantage of over 70s life insurance cover is that it doesn't require any medical health checks. But it's worth considering all your options. It’s also worth knowing that some policies have a cut-off age of 80, so you might find you have less choice the longer you leave it.

Over 80s life insurance

You might have fewer options if you’re taking out a new senior life insurance policy once you've hit your 80th birthday, but there are a few providers who continue to offer policies up to age 85. If you opt for whole of life or level term life insurance, you'll be asked medical questions. But with an over 50s policy you'll be guaranteed acceptance by any provider who accepts over 80s.

Level term cover

Level term insurance is designed to pay out a fixed lump sum if you die during the term of a policy. If you don’t die within the policy term, your family won’t receive a pay-out. This type of policy can be an expensive option if you start it in later life. You'll also need to consider the length of term. If you opt for a shorter term, you might outlive it, but if you choose a long term, you might pay more monthly.

When comparing quotes for senior life insurance, remember that the cheapest option isn’t necessarily the best. It’s important to look at the specifics of each plan to make sure it’s the best fit for your needs and your situation.

What does funeral cover include?

There’s a wide choice of providers offering pre-paid funeral plans, but what’s covered can vary. Some plans only cover the funeral director’s bill, while others could include the cost of limousines for the mourners and the celebrant’s fees. Check the small print to confirm what’s included.

By using a prepaid funeral plan, you may be able to lock in some of your funeral costs at today’s prices, rather than leaving your loved ones to pay higher costs after you die.

Compare the Market doesn’t offer these types of  pre-paid funeral plans.

Why might I need life insurance for seniors?

You may not need senior life insurance after reaching 65 if you’re sure the estate you’re leaving will secure your family’s financial future, even after any inheritance tax. But if you’re not confident about that, you might want to consider life insurance for the following reasons:

• Passing on a legacy. Life insurance for over-65s could be a way to make sure that when you go, you leave a tidy sum for your family.
• To cover your funeral costs. Many people take out life insurance in later life to pay for their funeral costs. Considering that even the most basic funeral can cost on average around £3,953** and the average cost of dying is £9,200** when you take into account professional fees and other costs, it’s one way to cover your send-off without financially burdening those you love.
• Cover for inheritance tax. Some people worry that inheritance tax might wipe out part of the legacy they leave to their family. For estates worth more than £325,000, a tax of 40% is applied to the remaining amount, although the threshold before inheritance tax is due rises to £500,000 if your estate is worth less than £2 million and you leave your home to your children or grandchildren in your will.
• Outstanding mortgage. If you take out a mortgage in your 40s or 50s, you might still be paying it off in your 60s or 70s. Senior life insurance could help chip away at the balance or cover some of your mortgage repayments if you die before it's paid off.
• Other debts after death. You might have other outstanding debts like a personal loan or bills. The pay-out from a life insurance policy could help pay these off, so more of your estate goes to your loved ones. 

**SunLife Cost of Dying report 2023.

Is critical illness covered by senior life insurance?

Critical illness cover typically pays out a tax-free lump sum if you’re diagnosed with a serious illness listed in the policy. A critical illness can include a stroke, heart attack or non-terminal cancer.

Critical illness cover can be added to run alongside a life insurance for seniors policy. A combined policy provides just one pay-out– either when you’re diagnosed with one of the conditions listed or when you die – whatever happens first. If you want a pay-out for both, you could also buy critical illness cover as a separate, stand-alone policy.

Many older people worry about Alzheimer’s and other types of dementia. If this is a particular concern for you, make sure you choose a critical illness policy that includes dementia, where you'll receive a pay out if you get a definite dementia diagnosis that can help you pay for any necessary care.

Just be aware that some insurance providers won’t cover pre-existing medical conditions – problems you had before taking out the policy.

Read more about what is and isn’t covered by critical illness insurance. The type of policy that works best for you will depend on your individual circumstances.

Should I place my senior life insurance in trust?

A way to protect your beneficiaries from paying inheritance tax on your life-insurance pay-out is to write your life insurance policy in trust.

If your life insurance policy is in trust, it won’t be considered part of your estate when you die, so it won’t be subject to inheritance tax. It also means your beneficiaries should receive the money sooner, potentially in weeks rather than months, as it won’t need to go through the probate process.