Over 50s plans what are the pros and cons?

What is an over 50s plan?

Over 50 life insurance plans provide a guaranteed lump sum when you pass away. There is no investment risk with this type of policy and the lump sum can help to cover funeral costs or, left to your loved ones as a cash gift.

The positives

With these plans, no health questions are asked and you won’t need to have a medical so you’re guaranteed to be accepted as long as you are aged between 50 and 85 years old.

An over 50’s plan could be for you if you:

  • Have a history of medical conditions
  • Have been recently diagnosed with a medical condition
  • Are a heavy smoker
  • Are seriously obese

The monthly premiums are fixed and the sum assured is guaranteed. Whatsmore, premiums are only payable until your 90th birthday but your cover will continue beyond this age.

These plans are a good alternative for those who do not meet the required criteria for a whole of life policy.

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It is important to seek expert advice.

The negatives

  • Inflation will, over time, reduce the value of the cash sum paid out on your death which is why some insurers offer an indexation option to help combat this. With these plans, the final sum increases in line with inflation as do the monthly premiums. Find out more about the importance of index linking here
  • The full cash sum assured is not payable within the first two years. However, if you pass away within the first two years, your estate will receive 150% of the premiums that have been paid. Should you have an accident and pass away, the full benefit or more will be paid
  • Over-50s’ plans are insurance schemes, so once the money is paid in, you can’t get it back. However, if you miss just one payment and the plan lapses ( ie ends due to non-payment) there will be no payout and you won’t get any of your premiums back
  • Depending on how long premiums are paid for, the total premiums paid may be greater than the cash lump sum payable on death 
  • An Over 50’s plan is likely to provide a lower sum assured than a fully underwritten policy on a like for like premium.  

These plans are a good alternative for those who do not meet the required criteria for a whole of life policy. but it is always best to talk through your situation with an experienced adviser in the first instance.

How the premiums differ between whole of life and an over 50s plan

For a 60-year-old non-smoker:

A whole of Life policy with a sum insured of £10,000 would cost £21.73 per month (subject to underwriting). Including indexation.

An over 50s Plan with a sum assured of £10,227 would cost £38.00 per month. Including indexation.

Quite a difference in monthly premium. Quotes correct as of October 2019.

The alternative

In the first instance, a whole of life policy should be explored with your adviser. Only if this is not a possibility should an over 50s plan be considered. Owing to the higher premiums and negative factors mentioned above.

Please note that the premiums provided are indicative only and are based on this specific case study/ example, which is shown for information purposes only. Your own circumstances will determine whether the amount payable is more or less than the figure quoted.

Getting expert advice is essential and having peace of mind should the worst happen in the future is invaluable.

For help and advice – Call 0800 644 4468

Office hours – Mon – Thurs 09.00 to 19.00 and Fri 09.00 to 17.00

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Next steps

Whilst you are welcome to get a quote online we would recommend you talk to one of our advisers.

Any quote we provide you with will take into account to your circumstances, your medical history, as well as your budget!

An online quote is just that – a quote – it isn’t a definite offer of cover.
What really matters is the premium you are offered, after your application has been assessed.

Call 0800 644 4468 for help and advice

Please feel free to read our Independent client reviews, or read about the team at Future ProofCall me back

Take a look at our handy guides ‘What Cover is Right for me?’

Do you suffer from a medical condition and concerned you can’t secure Life
Insurance?  Please view our ‘Medical Guides’ for further information.

Whilst we will make every endeavour to help someone to arrange insurance, there is no guarantee of success.  All applications are subject to
underwriting.

Links to third-party websites exist for information only and we accept no responsibility or liability for the information contained on any such sites.
The existence of a link to another website does not imply or express
endorsement of its provider, products or services by us or St. James’s Place.

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