Over 50s Plans
An over 50s plan is ideal for someone preparing for retirement, who wants to make sure their loved ones are provided for when they pass away. The policies are available to all people over the age of 50, and can be taken out at any point from your 50th birthday onwards. Obviously the later you leave it to take one out, the less you will leave behind at the end.
Over 50s plans come in many different forms, giving everyone some choice over the sort of plan they want to take.
The fixed payment plan is the simplest policy, where the policyholder knows how much will be left behind when they take out the plan and they pay a fixed sum every month until they die, or until their 90th birthday if they live that long.
These plans are straightforward in that they do exactly what they say on the tin, but should inflation start to increase at a high rate, the end payment could end up being nearly worthless.
To counter this problem, insurance companies have created the increasing plan, which works in the same way but with both the payments and the final payout rising in line with the RPI (Retail Price Index).
Most plans in this situation will actually increase their premiums by 1.5% for every 1% increase in the RPI, but only increase the final payout by the 1% increase of the RPI, leaving people worse off.
The final plan is the funeral plan, which you set up to pay for your funeral when you die. Again these plans will follow the same RPI principle, with the premiums increasing by 1.5% and the payout by 1% for every 1% increase in the RPI.
These plans are ideal for those not wanting to leave loved ones with any financial worries when organising a funeral, and are very popular.
The main advantage of all of these schemes is that they don’t require a medical, so everyone is guaranteed to be accepted. However, you must have been paying in to them for a fixed time, normally two years, before they will pay out.
These plans are most popular with people who still have financial responsibilities, and give them peace of mind that should they die unexpectedly there will be money set aside to look after their financial responsibilities.
Most schemes are heavily weighted in the favour of the insurance company offering them, and someone who takes a scheme at 50 and lives beyond 75 will nearly always end up spending more in premiums than they receive back in the end.
Once again, consult an IFA (Independent Financial Adviser) if you are unsure, and make sure you shop around for the best rates.