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You agree how much to pay each month when the policy starts. In return, the insurer provides a stated amount of cover.
Provided the policy remains active and a valid claim is made, that amount is paid when you die.
The word fixed is important because neither the premium nor the payout normally increases over time.
What does fixed actually mean?
There are usually two figures to look at.
For example, if your policy costs £20 a month, that premium would normally remain £20 rather than increasing as you get older.
If the policy provides £5,000 of cover, the payout would normally remain £5,000.
MoneyHelper describes over 50s life insurance as generally having a fixed monthly premium and fixed cash payout.
This makes the policy easy to understand, but a fixed payout has a disadvantage.
£5,000 in twenty years may not buy as much as £5,000 does today because prices can rise.
In 20 years, £5,000 could buy about what £2,768 buys today.
Illustration only. It assumes prices rise by the same amount every year.
Is fixed life cover whole of life insurance?
Usually, yes.
Traditional fixed over 50s cover is designed to remain in place for the rest of your life rather than ending after a set number of years.
This is different from term life insurance, which might cover you for 10, 20 or 25 years and then end.
Legal and General, for example, currently describes its Over 50s Fixed Life Insurance as providing whole of life cover with a fixed premium and fixed cash sum.
Other insurers can use different product names and policy structures, so always check the individual terms.
Related guideTerm life insurance for over 50s: how does it compare?Do you need to answer medical questions?
Many fixed over 50s policies offer guaranteed acceptance without detailed medical questions, provided you meet the insurer's basic eligibility requirements.
This can make them useful for people with existing health conditions.
The trade off is that the amount of cover can be considerably smaller than you might obtain through medically underwritten life insurance.
If you are reasonably healthy, it is worth comparing both.
Related guideOver 50 life insurance with no medical questionsDoes the full payout apply immediately?
Not always.
Guaranteed acceptance policies commonly have an initial waiting period before the full payout applies to death from natural causes.
Legal and General's current fixed over 50s policy, for example, provides its full cash sum after the first year. If death occurs during the first year for any reason other than an accident, the premiums paid are refunded instead. If death during the first year is the result of an accident, the full cash sum is paid, subject to the policy terms.
Waiting periods and payout rules vary by insurer. Always check the policy wording.
Waiting periods vary, so check the policy before buying.
Related guideDoes over 50 life insurance start immediately?Can you pay more than the policy pays out?
Yes.
Suppose you pay £25 each month for £5,000 of cover.
That costs £300 a year.
After 20 years you would have paid £6,000.
Your insured amount could still be £5,000 because the payout is fixed.
MoneyHelper specifically warns that people can eventually pay more into an over 50s policy than their beneficiaries receive.
This is one reason to compare the long term cost rather than looking only at the monthly premium.
Related guideTry the premiums vs payout calculatorIs fixed life cover suitable for everyone over 50?
No.
It can suit someone who wants a relatively modest cash sum left behind whenever they die and values a predictable monthly premium.
Someone needing £100,000 for a mortgage or substantial family protection may be better served by medically underwritten life insurance.
Speak to a qualified UK life insurance adviser who can compare options available through their panel. 50Life.co.uk can introduce you to an adviser who can discuss your circumstances. 50Life does not itself give personalised advice.
The simplest way to understand fixed life cover is this.
You know what you will pay each month and you know the cash sum the policy is designed to pay. Neither normally changes simply because you get older.
