Tag Archives: over 50

I bought an over 50s life policy thinking it was a funeral plan

I bought an over 50s life policy thinking it was a funeral plan. What should I do?

An “Over 50s life policy” is a perfectly valid form of insurance.   The only trouble is that the “non profit whole of life policy” which forms the basis for most of them is totally unsuited for the role many people buy it for. It will, in most cases, NOT pay for your funeral for the reasons below..

That comes as a shock to many, who have not though about the subtle nature of much of the advertising, nor have they read the health warnings.

Some of the disadvantages:

  • 1) Miss more than a couple of payments (say when you are ill in hospital) and your policy will normally be cancelled and you will get NOTHING back.
  • 2) As funeral costs increase (49% or so over the last 5 years) the value of your policy shrinks. Maybe if you take out a really large on or die just after the non payout period it will.
  • 3) In most cases you will have to continue paying until you are at least 85, and you could end up paying in more than you get out.
  • 4) Worse still, the family may not have access to the life insurance until probate has been granted, which may be many months later.

So should I cancel my Over 50s policy?

We think the Regulators should be ashamed of themselves for trashing the decent policies which used to be available. We don’t think non profit whole of life policies should be allowed, for the simple reason that the public just do not understand what they are as they read what they want to read not what the adverts say.

That said, you will get nothing back if you cancel a non profit whole of life policy. That is probably fine if you have only just taken it out, but not so good if you have been paying into it for years and perhaps are poorly.

So what our members might well suggest is a “part” funeral plan which pays for the funeral directors services, but does not allow for the third party costs such as cremation, doctors fee or clergy. You would be surprised how many people (again) don’t read the small print and buy these as a proper funeral plan not a part plan!

Use the navigation bar at the top to find one of our members in your local area and they will be happy to discuss how to bee up your over 50s life policy.

Not a Funeral Plan

When is a funeral plan not a funeral plan?

Sounds like a trick question.  But it isn’t.  Many websites offer “funeral plans” which are lacking in major respects:

1) The Funeral is not included in the funeral plan.

Daft isn’t it – a funeral plan with no allowance for the cost of the cremation (or burial) is hardly a funeral plan in our opinion.  We’re surprised that Trading Standards don’t take them to task.   But we can only assume that many people don’t look into the fine print to realise they are not buying a proper funeral plan!  In some cases, even we have to look quite hard to see through these marketing ploys, so the public have little chance of realising.

2) The Funeral Plan isn’t a funeral plan – it is a life insurance policy.

Nothing wrong with life insurance policies if that is what you need.

However:

a) Most Over 50’s life insurance plans offer no inflation protection, and with the cost of funerals going up by about half every 5 years, it won’t be long before the policy pays nowhere near enough to pay for a funeral.  That is why we prefer proper funeral plans to the standard Over 50’s plans.

b) Worse still, if you die early your family may lose out, and if you live too long, you may pay far more into the plan than comes out at the other end.

c) Think it can’t get worse? Oh yes it can! To avoid Regulatory issues, most Over 50’s plans are what is call “non profit whole of life” – they never have a cash value.  The effect of this is that should you ever be unable to pay, you may well lose every penny that you have paid in!

3) The Savings Account Funeral Plan.

This is the commonest of all funeral plans.  Folk save up for their funeral in a deposit account which may be earning between 0.15% and as much as 1.5%, little realising that the cost of funeral has been rising at the rate of around 7% for some years.  That means that a £3000 deposit account which might pretty much pay for a funeral today would only be worth a real terms £2,000 in 5 years or less than half the original amount in 10 years time.  A proper funeral plan has built in inflation protection for the main costs.

How do I get advice as to which is the best funeral plan for me?

Do bear in mind that each plan offers different options from most other plans, and a single funeral plan company is never ever going to be best for everyone.

It doesn’t take very long (five minutes or so) to find out what people actually are looking for – though it can take a little longer when members point out some of the issues you may not even have considered.  Just contact our local member and he or she will be happy to talk you through the options.

It is an important decision, and one on which it is wise to take independent advice rather than relying on a company salesperson whose interests are different from yours! No one sets out to buy a funeral plan which is NOT a funeral plan!