More and more people over 60 are looking to extend their current mortgage - or perhaps take out equity release schemes or lifetime mortgages - and often alongside these plans they want to ensure that those they leave behind are financially covered should they pass away.
By taking out mortgage protection it can mean that the surviving partner will not, if there is a standard mortgage in place, have any need to sell the house. In the case of equity release or lifetime mortgages there could be a financial buffer for the surviving partner or a legacy to pass on to future generations.
Talk to an advisor (which is where we come in!). It's really important when you are older and looking for cover.
Some companies load premiums more heavily than others for older age groups but the advisors we will put you in contact with, who deal with a panel of the major UK life insurance providers, know who is likely to offer you the best rates,. And since they often have access to preferential terms as well, this means the combination of personalised advice and great premiums will deliver the best result for you.
Almost all to be honest - unless it is one that is due to come to the end of its term in the next few weeks or months.
Some of the mortgage types that can be covered and some additional factors to consider are explained below
This form of life insurance tends to be the cheapest for those who are older. There are two reasons why:
The amount of cover reduces as the loan is repaid.
As age will be a major factor in determining your premium, the amount that the insurer has to pay out gets less as you get older - in say 10 years time when you will be 10 years older your loan will be significantly smaller.
It's also perfectly possible to cover an interest only mortgage - it tends to cost a little more in premium terms, but quotations can be surprisingly affordable.
A popular option for retirees, Retirement Interest Only (RIO) Mortgages are designed for the over 60s - they are very similar to a standard Interest Only loan in terms of the type of protection likely to be required.
A lifetime mortgage is one that does not require repaying until you die or go into permanent care. There is a range of repayment options which allows the borrower to either
roll up the interest accrued,
cover the interest that is being charged (so the total amount borrowed stays the same - rather like an interest only mortgage)
or to make interest and capital repayments up to a set amount (maybe 10% of the outstanding balance).
It is also possible to change this during the term of the loan.
Life insurance can be purchased to provide protection, but it's really important that you talk though your plans with an advisor and discuss the exact protection you are looking for. For instance, if your house was jointly owned and both of you went into a nursing home you will probably still have to sell your home as your life assurance policy will only be paid on your death.
You also need to understand from your lender as to whether they will allow your loan to be repaid from the proceeds of a life insurance policy on your death. Not all lenders will.
If you are looking to provide a legacy, cover the repayment of other loans, or pay for funeral expenses a whole of life Life Insurance policy may well be an ideal way of doing this. It will provide a defined amount that will be paid to either a surviving partner or descendants totally separate from the mortgage. As long as premiums are paid as agreed it will pay out on death even if you live to 110!
Talking of premium payments... often whole of life policies do not insist that you pay your premiums right up until your death. Alternative arrangements might mean that you pay for a set number of years, or until you are an agreed age (say 90 or 95). Afterwards you pay no further premiums, but your cover remains in force.
As there are a number of important differences between policies, talking to a trained advisor is very much recommended as the best way of getting the right mortgage protection for your circumstances.
Yes - by talking through your options with one of the team they can understand whether a life insurer is likely to want to investigate your medical history further, or whether you would be accepted without a full screening process. And they know which insurers are best to cover specific situations too, meaning they may well be able to steer you around potential pitfalls, resulting in lower premiums, and faster acceptance too.
No, but as you get older fewer insurers will accept you and premiums will rise.
Life insurance can be found for the over 70s. It's even possible to find life insurance for the over 80s too. There is a good range of insurers very happy to cater for this market.
As reassurance, there are even products available to pay inheritance tax bills - and these sometimes involve policyholders into their 90s.
You will probably have seen many ads on the TV promoting life insurance for the over 50s or over 60s. Typically they make a big noise about no medical being required.
Whilst they look attractive at first glance there are often disadvantages with them - here are a few:
As they are heavily sold on the fact that no medical questions will be asked they attract policyholders with conditions - meaning their payout rates tend to be higher - this in turn means premiums have to be higher, or the amount insured is lower.
You may also find that there is a no payout period of a year or two - again to protect the insurer from policyholders who are worried about their imminent mortality.
Typically there is no end date for premiums to be paid - that means that the policies can end up being a lot more expensive over their term.
We would highly recommend that if you are considering taking a policy that has been recommended by your mortgage advisor that you talk to the advisors we use as well. Then you can compare the two. We almost always find that our specialist team can access better terms and a wider range of policies resulting in a better result for our users. Understanding all your options for mortgage protection (rather than just those policies available through your mortgage advisor) means you are more likely to find the best cover at the best price.
Just click the button above or on the link below, pop in your details and we will get a call back arranged for you. It's really easy and normally only takes a few minutes. Remember that the monthly premiums you will be paying for years to come will add up to a sizeable amount of money so it's really important you get the best cover at the lowest rates from the start.
All advice is fee free, and there is no obligation to progress. If you have other policies you have looked at do have those to hand so they can be compared.
Lifesearch are our expert life assurance partner and they are one of the UK's largest life assurance brokers who have been offering their services for more than 25 years now. They can offer cover from a number of companies including Aviva, AIG, British Friendly, Legal & General, LV=, Royal London,The Exeter, Guardian, Vitality, Cirencester, Scottish Widows,National Friendly, Holloway, Shepherds Friendly and Zurich. They are, like MoneyMaxim, regulated and authorised by the FCA, and offer a guarantee to give you the most competitive premium possible to fit your needs without a fee and with no obligation.
This content was last reviewed on 12/07/2023