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A free gift can be a useful extra, but it should never be the main reason for choosing an over 50s life insurance policy.
The amount of cover, monthly premium, payment period, waiting period and policy conditions can be worth far more than the value of the gift. Comparing the insurance itself should therefore come first.
How do free gifts with over 50 life insurance work?
An insurer or insurance provider may offer a promotional reward when you take out a qualifying policy.
You normally need to apply during the promotional period and keep the policy active for a specified amount of time before receiving the gift.
- 1Apply during the promotional period
- 2Keep the policy active for the qualifying time
- 3Reward issued, or claimed by you
The exact conditions vary.
For example, an offer might require you to make a certain number of monthly premium payments before the reward is issued. Another might only apply if you buy through a particular website or telephone number. Some insurers' gift offers are only available if you buy directly from the insurer, and exclude policies bought through a financial adviser, broker or comparison site.
You should read the promotional conditions separately from the insurance policy terms.
Taking out the policy does not always mean the gift will arrive immediately.
What kind of free gifts are available?
Promotions change regularly, so there is no single gift that comes with over 50 life insurance.
Offers can include things such as:
- Shopping vouchers
- Gift cards
- Cash rewards
- Retail rewards
- Physical gifts
The value of the gift can also vary considerably.
A higher value gift does not necessarily mean you are getting a better insurance policy.
You could potentially receive a larger promotional reward while paying more each month or receiving a lower life insurance payout.
That is why the gift and the insurance should be considered separately.
Look at the life insurance payout first
The first figure to check is the amount your policy would pay when a valid claim is made.
This is often called the sum assured.
Imagine two policies both cost £20 per month.
Policy A provides £5,000 of life cover and includes a £100 gift voucher.
Policy B provides £6,000 of life cover but does not include a gift.
The gift attached to Policy A might initially make it look more attractive, but Policy B provides £1,000 more life cover.
This is only an illustration, but it shows why the value of the insurance can be much more important than the introductory reward.
Compare the amount your beneficiaries could receive before comparing promotional extras.
Compare the monthly premium
Check exactly what you will pay each month.
Many over 50s life insurance plans have fixed premiums, meaning the amount you pay each month does not increase as you get older.
You should still compare the premium against the amount of cover provided.
Two insurers could offer the same amount of life cover at different monthly costs.
Alternatively, the premiums might be similar but one insurer could provide a larger payout.
A £50 or £100 promotional gift can quickly become insignificant if you are paying several pounds more each month for many years.
Find out how long you have to pay
This is particularly important with over 50s life insurance.
Some policies require premiums until a specified age. Others can have different payment arrangements.
- How long premiums are payable
- Whether payments stop at a particular age
- Whether your cover continues after payments stop
- What happens if you live for many years after taking out the policy
The long term cost can be substantial.
For example, £25 a month is £300 a year. Over 20 years that would amount to £6,000 in premiums.
MoneyHelper warns that people with over 50s life insurance can sometimes pay more into a policy than the eventual payout their beneficiaries receive.
A promotional gift worth a relatively small amount should be considered in the context of those potential long term payments.
Check the waiting period
Guaranteed acceptance over 50s life insurance usually has a waiting period before the full insured amount becomes payable for death from natural causes.
The precise period depends on the insurer and policy.
If you die from natural causes during this initial period, the insurer may return the premiums that have been paid rather than paying the full insured amount. Some policies provide an additional amount as well.
Accidental death can have different rules.
Related guideHow a waiting period worksThe important point is that a free gift does not change the underlying claims conditions.
- How long the waiting period lasts
- What happens if you die during that period
- Whether accidental death is treated differently
- When the full insured amount becomes payable
MoneyHelper also recommends checking the waiting period and other policy conditions when comparing over 50s cover.
Check when you actually receive the gift
The words free gift can make an offer sound immediate.
It might not be.
Providers often attach qualifying conditions to promotional rewards.
You might need to keep the policy active for several months. The provider could then send the reward after that qualifying period has passed.
Look for the specific terms of the promotion.
Check how long you must hold the policy, when the gift will be issued and whether you need to claim the reward yourself.
Do not assume it will automatically arrive shortly after you apply.
What happens if you cancel the policy?
You should also check whether cancellation affects your entitlement to the gift.
Policies normally include a cancellation period. Check the policy terms for the period that applies.
A promotional offer may state that you only become eligible for the gift after this period has passed or after a certain number of payments have been collected.
If you cancel early, you may lose the reward.
More importantly, you should not continue paying for an unsuitable insurance policy simply because you want to receive a promotional gift.
The insurance should make sense without the gift.
Compare the policy as though the gift did not exist
A simple way to judge an offer is to temporarily ignore the free gift.
Would I still choose this policy if there were no gift?
If the answer is no, look carefully at why.
- Perhaps another policy provides more cover.
- Perhaps another insurer charges a lower premium.
- Perhaps medically underwritten life insurance could provide more cover for your money.
- Perhaps you do not actually need life insurance at all.
The gift should improve an already suitable offer rather than turn an unsuitable policy into an attractive one.
Do promotions affect how people compare insurance?
Promotional offers can influence how people judge insurance products.
FCA research into promotions in the general insurance market found that promotions could make it more difficult for consumers to correctly assess insurance prices and select the best deal. The research looked at general insurance rather than over 50s life insurance specifically, but it demonstrates why an attractive reward should not replace a proper comparison of the underlying policy.
The simplest approach is to put an actual value on the gift.
If a voucher is worth £100, treat it as £100.
Then compare that with the potential difference in premiums and life insurance payouts.
The insurance figures can easily be worth much more.
Over 20 years, the extra premiums cost £620 more than the gift is worth.
Illustration only. It doesn't include any difference in the amount of cover.
Check whether another type of life insurance could provide better cover
One of the biggest mistakes is comparing several guaranteed acceptance over 50s plans without checking whether you could qualify for ordinary life insurance.
Guaranteed acceptance policies usually do not ask health questions.
That makes them convenient, particularly for people with existing medical conditions.
However, guaranteed acceptance has a cost. Because the insurer has limited information about your health, the amount of cover available for your premium may be lower than you could receive from medically underwritten insurance.
Standard life insurance normally asks about your health, lifestyle and medical history.
Being over 50 does not prevent you from applying.
Having a medical condition does not automatically prevent you from getting cover either.
An insurer might accept you at its standard price, offer cover at a higher premium or apply other terms depending on your circumstances.
This means the most useful comparison may not simply be one over 50s plan against another.
It can be worth comparing guaranteed acceptance cover with other life insurance options available to you.
Consider whether the payout will keep its value
Many over 50s policies provide a fixed cash payout.
If you take out £5,000 of cover and the amount is fixed, the policy could still pay £5,000 many years later.
The amount has not fallen, but rising prices mean it may buy less in the future.
MoneyHelper highlights this as one of the potential disadvantages of over 50s life insurance.
This is another reason not to put too much emphasis on a promotional gift.
The policy could remain in place for decades. The value of the eventual insurance payout matters much more than a reward received shortly after taking the policy out.
Be careful with gifts linked to funeral costs
Some people buy over 50s life insurance because they want to leave money towards their funeral.
The payout can normally be used for this purpose, although the person receiving the money can generally decide how it is spent.
Over 50s life insurance is not the same as a prepaid funeral plan.
If your main objective is paying towards funeral costs, look at how much the policy is expected to provide and whether that amount is fixed.
MoneyHelper notes that over 50s plans commonly pay a lump sum that does not rise with inflation, meaning it may not cover the full cost of a funeral in the future.
A free shopping voucher today does not change that.
What should you check before accepting a free gift offer?
There are several figures worth comparing before making a decision.
These points give you a much clearer picture of the real value of the policy.
Is an over 50 life insurance free gift actually free?
Usually, the customer does not make a separate payment for a promotional gift.
That does not mean the gift should be treated as having no relationship to the overall commercial offer.
Insurance companies compete for new customers and promotions are one way of encouraging people to apply.
You are still entering into an insurance contract that may involve monthly payments for many years.
The useful question is therefore not simply whether the gift costs you anything directly.
It is whether the complete insurance package represents suitable value for what you need.
Should you choose the policy with the biggest free gift?
Not on that basis alone.
If two policies offer similar cover, similar premiums and similar terms, the promotional reward could reasonably form part of your comparison.
But it should come near the end of the decision rather than the beginning.
A £150 reward is of limited importance if another policy could provide substantially more life cover or save you hundreds of pounds in premiums over time.
Compare the permanent features of the policy first.
The gift is temporary.
The insurance could be with you for the rest of your life.
Speaking to a life insurance adviser
Comparing over 50s policies can become difficult because the headline monthly premium does not tell you everything.
An adviser can look at the amount you want to leave behind, your age, health, budget and reason for wanting life insurance.
They can also help you understand whether guaranteed acceptance over 50s cover or medically underwritten life insurance may be appropriate to consider.
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.
Insurer gift offers are often only available when you buy directly from the insurer, so a gift may not be available if you take out a policy through the adviser we introduce you to. If a free gift is included with an offer, treat it as an extra.
Choose the insurance based on the cover, cost and policy conditions first.
