How much over 50s life insurance do I need?

Last updated 26^th February 2024
5 min read

Working out how much life cover you need is an important but challenging stage in the process of taking out over 50s life insurance. When choosing your level of cover, you’ll want to make sure that the payout is enough to support your loved ones with particular costs they may face in the event of your death.

This can seem overwhelming at first but there is a simple way to look at it: you’ll need to add up the costs that you want the lump sum to cover and subtract the value of any existing assets that could be used to cover these costs instead.

This guide is designed to walk you through the process of calculating how much over 50s life insurance you need. Along the way, we’ll look at the different types of costs that you may want your payout to cover and help you through the calculation.

Please be aware that this article deals with over 50s whole-of-life insurance, and does not apply to other types of life insurance. Over 50s whole-of-life plans are intended for anyone over 50 (although upper age limits may exist with different providers), and they guarantee the final payout when you die (provided any waiting period has passed).

This type of insurance is perfect for covering funeral costs and other specific expenses, but isn’t intended for larger uses, like paying off a mortgage or supporting dependants long-term. You can learn more about whole-of-life insurance (and how it differs from term insurance) in our comparison article.

Which costs do you want your over 50s life insurance to cover?

The first step is to consider what you might want to leave a guaranteed sum of money for after your death. In the sections below, we’ll explore the most common types of expenses that an over 50s plan could cover. You may think of other financial commitments that are unique to your own situation – be sure to factor these in when deciding how much life insurance you need.

Funeral costs

Many people choose to include the amount required to pay for their funeral in their life insurance policy. Bear in mind that funerals can be expensive. Our latest Cost of Dying Report found that the total cost of dying – that's a funeral plus professional fees and send-off costs – now averages over £9,000.

SunLife's Guaranteed Over 50 Plan is often used to help cover funeral costs.

Leaving a nest egg for your loved ones

Aside from any financial need, you could use your over 50s life insurance to provide a gift to your loved ones. Used in this way, life insurance is a small monthly payment that means you’ll be able to leave a guaranteed sum of money behind after your death.

SunLife's Guaranteed Inheritance Plan is over 50s whole-of-life insurance that can be used for this purpose.

Paying off debts

While over 50s life insurance is generally not intended to cover a mortgage, it is possible that you could use it to pay off other kinds of debts. In some cases, personal loans and credit card debts will need to be paid off using money from your estate when you die. The terms of your debts may vary, and some may already be insured, so make sure you check the specifics and speak to an independent advisor if you are in any way unsure about what you owe and how to pay it.

Could any existing assets be used to cover these costs?

Once you know the amount you’ll need, the next step is to make a note of all your existing assets and consider which of these could be used to support your family after your death. This is an important and often overlooked aspect of working out how much over 50s life insurance you need, which could save you from overspending on your cover.

Only you will be able to tell how much your assets are worth and what costs they could be used to cover when you die. That said, there are a wide range of different assets to consider, including:

• Money kept as cash or stored in savings accounts
• Stocks and shares
• Property or land that could be sold to cover costs
• Valuable personal possessions such as vehicles, jewellery and collectibles
• Investments including annuities, bonds and other funds.

In some cases, you may also have another form of death benefit other than your insurance, which could help to cover some of the cost. For example, you may be enrolled on a pension scheme that pays out when you pass on, or you could be eligible for death in service benefit as part of your employment.

Calculating how much over 50s life insurance you need

Having worked everything out beforehand, the formula for calculating how much life cover you need is simple:

[The total costs you want your payout to cover] - [the value of existing assets that could cover them] = your life insurance payout requirement.

The key is to ensure that you’ve carefully thought through all of the potential costs that your loved ones could incur in the event of your death before moving on to the calculation. Check back over all of the considerations we’ve covered in this guide and ask yourself whether there are any other costs that are unique to your situation.

Calculating over 50s whole-of-life cover vs other life insurance

The calculations for over 50s cover can be very different to other types of life insurance, and are often simpler. With over 50s life insurance, the most important consideration is what you want the money to pay for, and how your existing assets might help you reach that goal.

Other types of life insurance – typically those purchased when you’re younger – may need to take into account your mortgage, income replacement, and the financial needs of your dependants. These calculations involve looking at your assets, current income, savings, the length of the financial support, and more.

The difference between over 50s and other types of life insurance is not a reason to rush your decision, but it is important to be aware that the calculation for a specific need is different to the calculation for mortgages and income replacement.

If you are ever unsure of what you need life insurance for, or what the best option is for you, speak to an independent advisor.

When should I get over 50s life insurance?

Everybody’s needs are different, but as a general rule, the younger you are when you start a plan, the bigger the payout will be. Your circumstances are likely to affect the final sum, but this is something you can discuss with your chosen provider, should you decide that over 50s life insurance is right for you.

If getting the biggest payout possible is important, then you should consider starting your plan as soon as you can. However, if you’re aiming for a specific amount, you may have more flexibility. Even if you don’t want the largest payout, starting earlier and paying lower monthly premiums may still be a better option than waiting.

Remember that with many over 50s life insurance plans, the final sum is only guaranteed if you continue paying your premiums. And, depending on how early you start and how long you live, you may end up paying in more than you get back.

How we can help

Working out how much life insurance you need can be a challenge in practice – and deciding on the level and length of cover may seem daunting at first. Don’t worry, we’re on hand to help.

Call us on 0800 345 7766 or get a quote today. Alternatively, if you’d like to read more before speaking to someone, take a look at our guide to over 50 life insurance.