Over 50s plans or term life cover in later life

If you are over 50 and looking at life cover, the two products you will meet behave in almost opposite ways. An over 50s plan accepts everyone, whatever their health, and covers you for the rest of your life. It pays a lump sum when you die, provided you keep up the premiums. Term life insurance asks health and lifestyle questions, can turn you down, and covers you for a set number of years only. If you outlive the term, it pays nothing and you get no premiums back¹.

The trade-off is cost against certainty. Over 50s plans are a form of whole of life cover, and because they always pay out, premiums are more expensive than term policies³. Term cover is much cheaper because the cover is temporary, but a payout is not guaranteed: if you have not claimed before the end of your chosen term, the policy ends and no benefit is paid⁵.

Which suits you depends on what you need the money to do. If you want a guaranteed sum for funeral costs or a small legacy and you cannot answer health questions, an over 50s plan is the route that accepts you. If you want a larger sum to cover a mortgage or family income for a defined period and you are in reasonable health, term cover buys far more protection for the same money. This page sets out how each works, what each costs, and where the risks sit.

Over 50s plans cover you for life; term cover stops at a set date

The single biggest difference is when cover ends. An over 50s plan is whole of life cover: it runs for the rest of your life, not for a fixed period, and the cover remains in place until you die¹³. Legal & General, for example, stops collecting premiums when you turn 90 but the cover lasts as long as you live¹⁵. Post Office describes its over 50s cover the same way: coverage for the rest of your life, not a fixed term¹³.

Term insurance works the other way. It covers you for a fixed number of years, the term, and you only pay premiums until the end of that term¹. The term is often set to match a mortgage, say 25 years, with the sum insured matching the amount borrowed². Some insurers offer terms stretching from five years all the way up to 70 years, and you can set a plan for any number of years, for example 15, 20 or 30, or cover until a certain age such as 40, 50 or 60⁵. One insurer describes term policies as designed to cover a specific period, often 10 to 30 years⁹.

That difference drives everything else. Because a term policy may never pay out, it can be priced far lower. Because an over 50s plan must pay out eventually, it is priced higher and the payout is usually fixed in cash terms, so its real value falls as prices rise¹.

How each one pays out, and what is left out

An over 50s plan promises a lump sum when you die, and provided you do not miss any premiums it is guaranteed to pay out¹. There is usually a waiting period at the start. Legal & General pays a cash sum if the policyholder has been covered for a year or longer; if death happens within the first year, premiums are refunded instead, and full cover is paid if death results from an accident¹⁷. Santander describes the same structure: die after the first year and the policy pays the guaranteed lump sum, with cover remaining in place until death¹⁸.

Term cover pays a lump sum only if you die within the policy term, and the policy expires with no return of premiums if you do not⁵. Some policies also pay out on a qualifying terminal illness during the chosen term²⁰. A payout is not guaranteed: if you have not claimed before the end of your chosen term, the policy ends and no benefit is paid⁶.

Both products have exclusions. Death from suicide is likely to be excluded during the first two years after the policy starts, and policies typically exclude these claims in the first one or two years²¹. Providing false information during the application may lead to a denial of the claim, and if a policy lapses through non-payment, coverage stops and no benefits are paid²¹.

What each costs and why premiums differ in later life

There is no fixed price for life insurance. Premiums are based on your age, health and lifestyle². That is why the two products diverge so sharply for older buyers: an over 50s plan cannot adjust for your health because it does not ask, so the price is set for the whole accepted group, while a term policy prices you individually.

Whole of life cover, which includes over 50s plans, is generally more expensive than term life insurance because of the guaranteed payout⁴. One insurer puts it plainly: because it guarantees a payout, it is usually more expensive than term life insurance²³. Another says whole of life premiums are usually higher than term policies²⁴. Independent guidance agrees that whole of life policies are more expensive than term insurance, which only pays out if you die within a certain timeframe²¹.

Within term cover, the type you choose changes the price. Level term, where the sum assured stays the same, is generally a little more expensive than decreasing term and cheaper than whole life²⁵. Decreasing term is usually cheaper than level term because the payout falls over time¹⁰. Increasing term, where the payout rises to protect against inflation, has premiums that rise over time as the death benefit does⁸.

Joint cover is another lever. Joint term life insurance is usually slightly cheaper than each partner buying an individual policy, though the price difference is often very small, because there is only one payout, after the first partner dies⁵. Over 50s plans cannot be taken out jointly, but each individual can take out their own policy²⁶.

Guaranteed acceptance or health questions: who can get which

Over 50s plans are built on guaranteed acceptance. Legal & General offers guaranteed acceptance with no medical for UK residents aged 50 to 80⁷. Santander offers guaranteed acceptance with no health questions, and TSB the same with no medical questions²⁸. One broker summarises it as guaranteed acceptance with no medical information required⁷.

Term cover is underwritten. Applicants are asked questions about current and past health, and disclosing a medical condition may affect the price or your ability to buy at all⁸. You will be asked about any family illnesses when you apply, and your acceptance terms may be affected by the nature of the condition³⁰. Insurers will also check your answers with your GP²¹. Some policies ask health questions only, while others may require a medical exam for a larger cover amount or specific health conditions³¹. Level term cover is not always medically examined: many policies are arranged on health and lifestyle questions alone, with further information or a medical report sometimes requested²⁵.

Health questions typically cover whether other illnesses have been diagnosed within the past five years, and whether you have received any medical treatment in the past 12 months²¹. If you smoke or vape using nicotine products, even occasionally, you must tell your insurer, and insurers weight premiums for people who use vapes, gum and patches the same as for cigarette smokers⁸. If you lie about your smoking and get a cheaper premium as a result, you will have committed fraud, and the policy may be declared void and any payout refused when your family claims¹².

Level or decreasing term: the options within term cover

Term cover is not one product. The main variants are level term, decreasing term and increasing term, and the choice changes both the payout and the price³².

Level term pays out the same amount if you die at any point during the term, with premiums constant, and it is more expensive than decreasing term cover²¹. Decreasing term means the amount paid out decreases over the life of the policy, usually to match a decreasing debt such as a repayment mortgage³³. Increasing term increases the payout over time to protect it from inflation, and monthly premiums may also increase¹⁹.

You can choose both the amount of cover and the term, from 5 to 50 years on level and decreasing cover³⁴. Some term policies allow conversion to a whole life policy within a specific timeframe or before a certain age, likely with higher premiums, and some offer the option to renew or extend cover at the end of the term, with premiums usually increasing based on your age at renewal⁸.

Applying: disclosure, GP checks and medical examinations

Applying for term cover means answering questions honestly and completely. Failure to disclose the necessary information may impact a claim later on⁸. Insurers may consider you high risk depending on your health, which could mean a more expensive premium, and they may require a medical exam before covering you³³. In complex cases, insurers will often send a specialist nurse to your home¹².

For people with diabetes, you must tell the insurer whether you have type 1 or type 2 diabetes or a rarer form, your HbA1c test results, hospitalisations, treatment changes and complications¹². People with Type 2 diabetes, particularly if well controlled, will often be able to get cover, though typically with higher premiums and sometimes exclusions³². Type 1 diabetes can also be covered, but the policy may come with extra restrictions¹². People with diabetes can buy most forms of life insurance, with level term and decreasing term the two main types³².

For cancer, people who have recovered may be asked to provide detailed medical information and attend a medical examination, with higher premiums and restrictions on the maximum sum insured¹². Insurers are legally entitled to refuse cover where the medical prognosis is that you will die during the policy term¹². Once a policy is in place, the premiums cannot be increased after a cancer diagnosis, and as long as you made full and honest disclosures and continue paying, the policy cannot be cancelled¹². If you already have life insurance and are later diagnosed with diabetes, you do not have to tell your insurer or pay higher premiums³².

Applying for an over 50s plan is far simpler: there are no medical questions and no health checks, which is the whole point of the product⁷.

When a policy lapses, is cancelled or pays nothing

Missing payments is the most common way cover is lost. On a term assurance policy, if you miss a payment the policy will usually end, leaving you without cover, though it can usually be restarted if you act within 13 months, with missed premiums caught up and likely a new medical underwriting assessment³⁵. Failure to keep up monthly payments will likely result in the policy being cancelled and cover removed²⁵. Many life insurance policies come with a grace period, usually around 30 days²¹.

On an over 50s plan the rules are stricter. You must pay the premium until you die, and if you stop paying, your entire policy is cancelled and you get nothing back¹. Santander states that if you do not pay your premiums during the premium term, your policy and cover will end 60 days after your last payment was due, and you will not get any money back¹⁸.

Term cover also pays nothing if you simply outlive it. If you survive the policy, there would be no payout and you would not receive a refund from any premiums paid²⁵. If you outlive your term life insurance policy, it simply ends without a payout³⁶. Life insurance is protection, not an investment: when the policy term ends, so does the cover, and you will not get any money back³⁷.

If you cancel, the position is similar. Term life insurance can be cancelled at any time with no additional fees, but you may not receive any refund of premiums paid and cover ends on cancellation⁸. Typically, you will not get your money back if you cancel your life insurance, though a refund of premiums paid is possible during the grace period²¹.

Writing a policy in trust and where to get help

Life insurance payouts are not subject to income tax or capital gains tax, but they may be added to the value of your estate and become subject to inheritance tax unless the policy is written in trust¹¹. Writing a policy in trust means the money goes straight to your beneficiaries without going through your estate first, so your family receives it sooner without waiting for probate, and it does not form part of your estate⁴⁰.

You can write a life insurance policy in trust when you first buy it. Most insurers offer this during the application, and there is normally no extra charge⁴⁰. It can also be done at any time by filling out the insurer's form; Legal & General, for example, allows a policy to be written in trust at any time, with the trust form sent to the company⁴¹. Writing a policy in trust does not replace a will: it helps make sure the policy payout goes to the right people, but it does not deal with everything else you leave behind⁴⁰.

You can hold more than one policy. It is common to have multiple life insurance policies, either for different purposes or as an additional policy to increase cover, and you can have several with one insurer or one each with several insurers⁴². You must tell each insurer that you have existing life insurance in place²¹.

If you are comparing what each type of cover does, our guides to over 50s life insurance and term life insurance set out the detail, and writing life insurance in trust explains how to keep a payout out of your estate. For free, impartial help understanding your options, MoneyHelper offers guidance, and the Financial Ombudsman Service can look at a complaint if a claim is refused unfairly.