3 March 2011

Financial Protection for over 50's

We generally think of financial protection - life insurance, health insurance - as being for younger people. It's certainly true that a young family with a mortgage have the greatest need for life cover in case the breadwinner is no longer there, for example. But there are situations where policies are also useful for older people. Here's some examples.

Self-employed people of any age don't have an employer who will keep on paying them if they are off sick. Their own sickness cover can easily be provided by purchasing Income Protection Insurance (previously called Permanent Health Insurance). Like most similar insurances the cost increases as you get older, but particularly if you have dependants it would be important to have.

These days, many people have mortgages continuing up to (and sometimes beyond) retirement. It will depend on circumstances, of course, but if a breadwinner dies and their spouse has no income of their own, potentially they could have to sell the house. So Term Assurance whose cover ends when the mortgage ends may still be the best approach. It can also be used to cover other loans, as well - who will finish paying for the car or the conservatory if you die prematurely!

Critical illness policies inevitably get more expensive the older you get, since the likelihood of making a claim increases. Nevertheless they have their place, particularly if you take one out earlier in life.

Whole of Life policies are likely to have a different purpose. These pay out only on death, whenever that may occur. In particular, for older people they can be useful to pay Inheritance Tax. It may be impractical to reduce an IHT liability to zero (most of the estate's value could be in the house, for example). So making plans to pay the expected IHT without waiting for probate is often the best approach.

New Endowment policies are unlikely these days, but many people still have these which were often taken out to cover mortgages. As well as the life cover they have an investment element (which is what gave them a bad name).

Private Medical insurance of various types increases in significance as we get older. Generally these policies give access to private treatment, whether in NHS hospitals or elsewhere.

Long Term Care insurance will provide some financial support in the event of needing to move into long term care in later life. There are not many providers of this, and costs are high, but it can provide peace of mind.

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