Over 50s life insurance plans compared Do you want to take a responsibility for your own funeral costs?

posted 19 Oct 2009 old people

Do you want to leave some money for your loved ones or do you want to take responsibility for your own funeral costs? Are you worried about the toll inflation is taking on the rising cost of funerals? There are plenty of providers with plans designed to reduce financial burden on the loved ones when you leave them behind.

Over 50's life insurance is not as much of a problem as it used to be, since many assurance companies are offering life cover all the way up to the age of 75, even sometimes 80. Notable providers, that offer guaranteed acceptance for customers aged 50 to 75, in this insurance niche are: Tesco Finance, Post Office Life Cover, Prudential Assurance, Sun Life Finance, Legal & General and so on. Some companies, like Legal & General, actually offer no less than three different life cover plans for the customers who are over 50 years old.

The pay-out sum usually depends on your age, gender and monthly premium you want to commit yourself to. Some providers, like Tesco Finance have a clause that demands that you pay for at least 2 years into your life cover policy or that you were a victim of an accidental death, before your beneficiaries become entitled to lump cash sum pay-out. On the positive side, usually no medical exam is required.

For example, if you are aged over 50, lets say 55 and you are a male, who wants to pay a premium of £10 per month, then your loved ones will receive a guaranteed cash lump sum of around £2,400. All other things being the same, if you pay £20 per month, lump sump will grow to about £5,200.

In the example above, it seems that financial service provider has assumed that you'll on average live another 20 years. With £10 monthly payment, over the period of 20 years, by the time you reach 75 years of age, you will actually start paying more to the life insurance company than they will pay to your family as a lump sum. However, if you are aged over 50 it is your responsibility to ensure that plan meets your needs and that life cover pay-out meets the requirements of your loved ones.

Another thing worth observing is that any applicant who is over 50 years of age is only limited to the maximum monthly premium of £50. This leads us to believe that, with the aid of a simple calculation, 5 x £10 x £2,400 = £120,000 is the maximum lump sum pay-out in case of death, which is much less than the maximum pay-out available to younger people, which to most insurers are currently worth around £500,000.

In principle, you need to keep paying the premiums until you die, but with Legal & General, when you reach your 90th birthday, you can stop paying the premiums and the life cover will continue for as long as you live.

Life cover plans, for over 50s, broadly fall into three groups: Fixed plans, Increasing plans and Funeral plans. Fixed plan pays a fixed cash sum, Increasing plan pays more as you increase your premiums and Funeral plan ensures that costs of a traditional cremation plan are met. The benefit paid out from each one of those plans can be used to cover funeral expenses, to leave a gift to your grandchildren or cover the unpaid bills.

As predicted, by the year 2015 the average cremation funeral price is going to rise above £3,200. By taking one of those plans you have a peace of mind in the knowledge that you are helping your family at an emotionally difficult time.

As with all the life insurance and cover plans, one has to be very much aware that they do not have cash in value at any time. Many of those plans will not pay if you die within two years of joining the plan, but some of them will return all the premiums paid out up to that point, like with Sun Life or Prudential.

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