You’ve all seen the ads on TV for over 50’s life insurance, God knows there are enough of the bloody things. Well, I got to wondering how good they can really be. They say that you don’t need a medical, nor even answer any medical questions. All you’ve got to do is pay a regular premium and you are guaranteed a lump sum when you die. So, where is the catch to this life insurance for this over 50’s? What if you are terminally ill? Could you sign up for a number of these polices, knowing full well your loved ones will get a pay-out in a year or so? If you’ve ever wondered if getting over 50’s life insurance is worth it, or if you’ll get is a pen for your troubles (Have you noticed it’s no longer a Parker pen?), then here are the facts that I’ve discovered about life insurance for the over 50’s.
1. You have to keep up with the payments
The first thing you need to be aware of is that, unlike a normal life insurance policy, life insurance for the over 50’s is not an investment plan. You can’t cash it in, transfer it, or any other such thing. As soon as you stop paying, you lose all your premiums. If you miss just one payment, your money is gone!
2. The premiums and pay-out are based upon your age
The older you are when you sign up for life insurance, the higher the premiums and the lower the pay-out. I wouldn’t have expected anything less really, but I thought I’d check. Different companies have different rules for the maximum age that they will take on a person for new cover as well.
3. You are likely to pay in more than you get out
Life insurance policies for the over 50’s differ from company to company, but it is quite likely that will pay more in premiums than your loved ones will receive on your death. The plan that Michael Parkinson promotes is a policy from Axa Sun Life and, with Parky’s life insurance, if you signed up at the age of 50, you would only have to live until you were 75 to have paid in more in premiums than you will get from the pay-out.
4. Life insurance plans for the over 50’s vary considerable
If you are considering taking out life insurance, then you would be well advised to shop around, because the pay-outs for different providers vary quite considerably. As an example, if you are a non-smoker and you pay £20 a month into cuddly Parky’s plan, your pay-out would be £6,155. If you paid the same amount into a similar policy from National Friendly Society, you would get a pay-out of £1,715 more.
5. You have to keep on paying if you live longer than you expected
If you get lucky, and you live for a long time, even though you will have already paid well over what you will receive from the policy, you may still have to keep on paying the premiums if you ever want anyone to see a pay-out.
6. Not all plans take inflation into account
Another thing to check before you take this type of life insurance is whether or not the plan takes into account inflation. Five thousand pounds may seem like a reasonable figure today, but will it in thirty years’ time?
7. It probably won’t pay for the funeral anyway
The adverts for over 50’s life insurance suggest that the pay-out would pay for a funeral and there would be some left over for your loved ones. That is very unlikely, given that the average cost of a funeral in the UK now stands at nearly £8,000.
8. Life insurance for the over 50’s works, if you are not in good health
Because life insurance plans for the over 50’s do not require you to answer any questions about your health, if you are not the healthiest chap on the block, they do make sense, but you need to do your sums. If you took out Parky’s insurance plan at the age of 65 and you don’t make it to the age of 68, the plan would make a tidy profit of about £10,000 with monthly premiums of £74.
9. Anything with free gifts has to be questionable
In my opinion, a financial product that offers a free gist as an incentive for you to sign up has to be questionable. The Axa Sun Life plan comes with £25 of Marks and Sparks vouchers and a TV, camcorder, or a car satellite navigation system, as a gift. That’s tacky, and it just shows you that they are expecting to make a good profit out of you.
10. Is life insurance for the over 50’s worth it?
Whether or not life insurance for the over 50’s will be worth it for you, depends on your own personal circumstances. If you think you might be knocking on heaven’s door in under a year, then no, because many policies require a year’s premium before they will pay out. If you are a fit and well you expect to get a birthday card from the Queen, then it’s probably not worth it either, because you will pay in more than you get out. However, let’s not forget that these policies will cover you for the unexpected too. You should do your sums and see if simply saving up your money wouldn’t better, but no one can guarantee how they will live for, so life insurance policies of this type, would give piece of mind in respect of unexpected early death, even if they aren’t the best value for money for many people in the longer term.
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