What is over 50’s Life Insurance and is it a good idea?

Over 50s life insurance is a type of life insurance that can be taken out if you’re aged between 50 and 80. You pay monthly premiums, and as long as you’ve paid premiums when due, when you pass away your loved ones will receive a cash sum.

You can have more than one over 50s plan and beneficiaries can make multiple life insurance claims when you die. However, providers do restrict the maximum amount of life cover allowed per person, which ultimately means there are limitations on the number of over 50 plans you can have.

These represent a great option in many ways if you die – AXA Sunlife‘s over-50s product is one of the best known, thanks to popular advertising fronted by Sir Michael Parkinson – so popular in fact that the insurance has seen nearly 790,000 people signing up for cover – ensuring that your loved ones will receive a cash amount, freeing them from the worry of funeral expenses.

Indeed, if you die only a few years after taking out this plan, it will be of real benefit to your loved ones – the issue comes that if you live a long time, you will probably have paid in more than you get.

Watchdog reported on 84-year-old Mary Vickers, who took out two AXA Sun Life policies with a combined total planned payout of £2738. When her daughter went through the paperwork she discovered Mary had already paid in £3,727 and that she’ll have to keep on contributing £22 a month – until the day she dies. Policy holders like Mary would have ended up with far more had they just put the cash in a savings account.

June Tapping’s parents took out their first plan in 1987, but as its value dwindled, they decided to top it up with a second. AXA Sun Life has encouraged them to do the same thing – again and again. They now have 10 plans and have paid in more than £10,500 even though all the lump sums add up to only £6384 – and the plan cannot be cashed in, unlike a savings account.

However, the plans have their place – the monthly contributions are small and offer peace of mind, after all, nobody wants to leave the legacy of unexpected funeral costs.  However, they are not the only options, and it’s worth speaking to an advisor to find the best plan for you.  Other options include investments and savings, a funeral plan and other financial products – and that’s the key to finding the right plan.  With any financial product, the best way forward is to seek independent advisor from a regulated provider, rather than being tempted by the promise of a free Parker pen.

About Lisa Baker, Editor 2423 Articles
Lisa Baker is the Editor of Always Finance, and writes about Business, Finance Technology and Healthcare. Lisa is also the owner of Need to See IT Publishing.