Life Insurance For Retirement Guide

If you are now retired or coming up for retirement, you may have some of the following concerns hindering you from having complete financial peace of mind.

• When I retire, what will happen to any existing life insurance coverage under my employment contract?
• How can I leave my Estate free from an Inheritance Tax Bill when I pass away?
• How can I provide a cash gift to relatives?
• I still have a mortgage and other substantial financial commitments, so how will this be repaid if I die?

We answer all these questions in this helpful guide to life insurance for retirement.

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What Is Life Insurance for the Retired Person?

Life Insurance for retired persons pays a lump sum if you die. The insurance payment is funded through monthly premiums paid to the insurer.

Insurance premiums will vary based on the size of the required financial payout and whether a policy requires medical screening or is a guaranteed acceptance policy.

Why Do I Need Life Insurance for Retirement Cover?

There are different reasons why you should think about life insurance for a retired person. However, you should realise that life insurance is not a one-size-fits-all solution.

Here are reasons why you should get coverage. Perhaps one will apply to your situation?

Inheritance Tax Bill (IHT)

If you have assets within your estate, such as property, that you wish to pass on to loved ones, this will be subject to inheritance tax in the UK. Life Insurance can be tailored to pay off an IHT bill should you pass away.

Outstanding Mortgage

If you are retired, you may still have an outstanding mortgage on a property, and taking out a life insurance for retirement policy will mean that the mortgage is repaid if you should die.

Funeral expenses

Should you pass away suddenly, your relatives may struggle to pay for your funeral expenses if you leave no money, and they are also struggling financially.

A financial lump sum as part of a life policy can provide a small payout to cover funeral costs and allow you to pass away with dignity.

Settle small outstanding debts

You may have small debts, perhaps on credit cards, a car loan, or hire purchase agreements. If you die, your loved ones may struggle to pay your outstanding bills.

Life insurance can help avoid this situation and provide the money needed to settle your financial obligations should you die.

Employer cover may cease

For an employee who is 60 or over, retirement is on the horizon. Some employers include a death-in-service benefit as part of an employment contract, where a lump sum is paid out should you die.

When you leave the workplace, these life policies cease, and putting in place life cover will ensure the insurance continues after retirement.

Charitable donations

A policy can be set up for just a few pounds a month to leave a financial cash amount to a favourite cause or charity when you pass away.

Leave money for relatives.

When you have children or grandchildren, a nice touch can be to leave a financial gift when you die.

A relative can use a lump sum from a life insurance policy as they wish, perhaps as a deposit on a property, to pay university fees, or to buy a car.

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• Compared With The Main Competition, There Are Fewer Exclusions For Retired People
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• Terminal illness coverage at no extra charge (available on all term policies)

Insurance Hero is an independent broker specialising in life insurance for retirees. We are experts at putting in place the best life insurance for retired person policies, which will payout when you need it most. Contact us today on 0203 129 88 66 for a no-obligation life insurance quote.

Life Insurance with Medical Screening

If you require a comprehensive life insurance policy for a retired person for a large sum assured, an insurer will require medical screening.

It will involve full disclosure of your medical history, GP reports, and a complete medical before being accepted for a life policy.

Medical screening is a requirement if you need life insurance for retirement to cover a substantial asset or liability. The primary examples are:

• If you wish to cover an IHT Bill, so your estate passes on unencumbered.
• You may still have an outstanding mortgage or want to purchase another property with a mortgage.

Life insurance with medical screening often includes a critical illness benefit.

Under life insurance with medical screening, there are two choices:

Fixed Term Life Insurance

Fixed-term insurance is when the plan’s duration is clearly defined. You will pay a fixed monthly amount for the duration of the policy.

If you die after the policy ends, no payout will be due. Fixed-term insurance is often associated with a defined term of financial commitment, such as a mortgage.

Fixed-term insurance is particularly cheap for people under 30.

Whole of Life Insurance

Whole life insurance is a policy with no end date; it will only cease when you die, whenever that is.

It is more expensive than a fixed-date policy and is appropriate for an IHT Bill due at your death.

Life Insurance with Guaranteed Acceptance

Sunlife made famous a senior life insurance policy known as guaranteed acceptance, which was also known as an over-50s life plan.

The plan also covers a broader age range of retirees, spanning life insurance for over 60-year-olds and 65-year-olds through to 80-year-olds.

It differs from a traditional life insurance policy that requires medical screening, as acceptance onto the plan is guaranteed regardless of any pre-existing medical conditions.

However, there is a trade-off related to the sum assured, also known as the payout amount.

Life Insurance with medical screening may offer life coverage for hundreds of thousands of pounds or more.

Guaranteed acceptance policies usually cap at approximately £30,000. That is why there is a clear distinction between the two covers.

Guaranteed acceptance is used for small payouts such as funeral costs, gifts, or charitable donations.

The best-guaranteed acceptance policies will have the following features:

Immediate accidental death coverage

Accidental death is covered in the first year of the policy and is essential, as should you die from other causes during the first year, no payout is due.

Flexible payments

Good insurers will allow premium variations as long as a minimum monthly payment is maintained. This feature is helpful for anyone who encounters financial difficulty maintaining a full monthly premium payment.

Full insurance cover after one year

Reputable insurance providers will pay out after the first year, should you die, whatever the cause. Any insurer that inserts a two-year or longer caveat should be avoided.

Cease of premium limit

Good insurers will allow guaranteed acceptance policyholders to stop making payments after reaching a certain age and remain covered. The age range varies between 85 and 90, depending on the insurer.

Payout guarantee

Reputable insurance providers offer a pay-out guarantee, which guarantees a cash sum as long as you have paid a minimum of half the policy payments.

Different Types of Life Insurance Coverage

There are different premium cover options for both guaranteed acceptance and medical screening plans.

Increasing Cover

Increasing cover ties to the UK annual inflation rate, as measured by the government’s benchmark consumer price index (CPI).

It means that premiums will rise in line with inflation, so any financial payout will retain its relative value to when a policyholder took out their life insurance policy.

Decreasing Cover

Decreasing insurance coverage means that premium levels and the resulting level of financial protection decline over a policy for a retired person.

Often, a decreasing coverage option is taken out if the plan is used to protect against a reducing liability, such as a mortgage that pays off over time.

Level Cover

Level coverage means the premium and the subsequent cash value remain the same for the policy’s fixed term.

It means the policy does not keep up with inflation, and the cash value may be less than what was agreed at the start of the policy.

How Can Insurance Hero Help?

Insurance Hero is an independent life insurance broker.

It means we work with numerous underwriters and are not tied to any one, allowing us to bring you the most competitive quotes.

As a specialist life insurance broker for retired person policies, our professional team understands your needs.

It will work with you to put together a watertight plan that will allow you financial dignity when you pass away.

Insurance Hero is available on 0203 129 88 66 for a free, no-obligation life insurance quote. Contact our professional but friendly team today.

FAQs

Is it worth having life insurance after 60?

Even the best life insurance for retired people can be very low-cost, particularly for a guaranteed acceptance plan.

If you wish to leave a financial gift to a loved one or ensure you can cover your funeral costs, then for as little as £4, you may consider it worth having life insurance over 60.

What is the best life insurance for seniors?

The best life insurance for a retired person or senior citizen is one that closely aligns with your circumstances.

No two people are in the same situation. For example, if you wish to pay an IHT bill so you can pass on your estate free and clear to loved ones, then a traditional plan with medical screening is the best option.

What happens to your life insurance after you retire?

The answer to this question relates to whether you have a death in service benefit as part of your employment contract.

If you are approaching retirement, your life insurance policy will cease, and you will need to put in place your own private policy.

Resources:

• https://www.legalandgeneral.com/retirement/our-products
• https://www.aviva.co.uk/retirement/retired-life