Life insurance for over 65s

Taking out life insurance after 65

After working for many years, you’ve certainly earned the right to kick back and enjoy your retirement.

If you have a private pension, this can help provide you with an income. It might even allow you to leave something behind for your loved ones. But, as you near the age where you can access your state pension, you might be thinking about other ways to support your family.

Life insurance for over 65s can give you the opportunity to leave a gift when you’re gone . It can also help cover expenses, such as mortgage payments, household bills or funeral costs. It also offers peace of mind, knowing your family will be taken care of while you enjoy your retirement.

Which type of life cover is right for you?

When you turn 65, there are two types of life insurance to choose from: term life and whole life.

Term life insurance

Term life policies cover a specific period and are available to people of a broad age range. They might be used to cover things like mortgage repayments and long-term debt. It could also allow your loved ones to maintain their lifestyle even when you’re no longer around. This type of policy expires at the end of the defined term. The payout is significantly higher than whole life insurance, and usually starts from £500,000.

Whole life insurance

Designed for people in their middle-to-late years, whole life policies are also known as guaranteed - life insurance or over 50s life insurance. They can help cover costs such as funeral expenses and credit card bills. They could also be used simply as a gift for loved ones. The payout from whole life insurance is usually between £10,000 to £20,000.

Why might you need life insurance after 65?

Most people benefit from some form of life insurance. But, if you’re confident the estate you’re leaving to your loved ones will cover funeral costs and allow them to lead a comfortable life, after inheritance tax, you might not feel the need for life insurance after 65.

If you’re not in that position, here are a few reasons why you might want to consider taking out life cover.

Covering expenses and leaving loved ones a gift

Whole life insurance is a type of policy for people over 50. It’s a lifelong policy which doesn’t require you to have a medical check-up or give any detailed information about your health. Because of this, it can be less expensive than regular life cover.

But it could be the right choice if you want a relatively low payout to cover outstanding expenses or debts. Or, if you want to leave loved ones a gift.

This type of life insurance can also be used to cover funeral costs. According to SunLife's 2024 Cost of Dying report, the average funeral in the UK now costs around £4,141. Taking out an over 50s policy can help ease the financial burden on your loved ones.

Providing financial security for loved ones

If you’ve managed your finances well and are living comfortably, you might want to take out term life insurance to help support the next generation.

You can take out level term or increasing term cover , depending on how much you want to pay and the amount you want to leave behind. Both policies last for a fixed period. If you pass away during the term of the policy, the insurer will pay a lump sum to your loved ones.

You can choose:

• Monthly premiums: You decide how much you want to pay each month. Your insurer will then work out your cover amount based on your monthly premiums.
• Lump sum: Choose a lump sum that you think will cover your needs. Your insurer will work out how much that will cost you each month

Covering inheritance tax

You might be worried about the impact inheritance tax will have on the legacy you leave to your loved ones. If your estate is valued at over £325,000, you’ll face a 40% inheritance tax on the surplus amount. For example, an estate worth £500,000 would cost £75,000 in inheritance tax¹.

This can be a significant amount of money, especially if your loved ones are relying on the money and assets you’re leaving behind. Some people take out a life insurance policy that covers this sum. For example, if you want your policy to pay £75,000 your monthly premiums would be worked out accordingly.

Remember, life insurance policies depend on your personal circumstances, such as age, health, lifestyle and occupation. If you’re thinking about life insurance after 65, you might find that your premiums are higher than they would have been a decade earlier.

¹Please note that these figures are for illustrative purposes only. They should not be the sole basis for financial decisions. Tax rules can change, so please get professional financial advice if you have any questions about inheritance tax.

How do I decide which life insurance policy is right for me?

Taking an honest look at your finances is the best way to decide if life insurance is right for you.

Here’s what to consider:

• If you are 65 and about to retire, think about the benefits you’ll lose when you leave work. For example, your employer might provide a death-in-service benefit if you pass away while employed.
  
  Without this safety net, would your partner or children have enough to maintain their lifestyle? And now that you can access your state pension, would it cover your family’s needs? Or would they need a little extra?
• Next, work out what your loved ones can expect to get when you pass away. You should also consider expenses and any outstanding debts. You should then arrive at the amount you might need
• Finally, you can use our life insurance calculator to see what your monthly premiums might be. You can then decide what type of policy will be best for you and your loved ones

Remember, choosing the right life insurance will depend on what you need cover for, how much you need and over what period.