'Direct offer' Over 50s Life Insurance could be poor value for money such as some very high profile plans e.g. the Sun Life Over 50's Plan which appear on our television screens almost daily.
It is claimed to be the most popular in the UK and is no doubt true given the amount of money spent on advertising but are they real value?
The smiles and the mention of trusted celebrities all seem plausible with happy '50 somethings' discussing the need to cover their funeral costs or leaving something for the family and the fact that no medical questions will be asked.
Roberts Clark/Financial Advice.net's director, Ashley Clark hit 52 in July 2018 and has been approached by a number of clients about these plans as well as getting over 50's marketing material himself.
He decided to review these schemes to look at the plus and minus points. His response was simple, "the only real plus point is that you are guaranteed to be accepted with no medical questions asked. This is clearly attractive for those that have medical conditions and ailments".
He has watched and read with interest statements made both in the literature and on television and, as you would expect, they are all legal and truthful. However, you really have to understand what happens to your money and what you could get elsewhere.
Quotes Compared: 'Whole of Life Plan' for a male, non-smoker, aged 52 in July, zero commissions.
Sun Life Over 50 - £21.00 per month buys you £7,192 guaranteed life insurance cover, premiums are fixed. Warning! Only accidental death is covered for the first two years of premiums that you pay. If you die of natural causes within first two years, nothing is paid out.
Zurich - £21.00 per month buys you £16,187 guaranteed life insurance cover, premiums are fixed (just like Sun Life). Application form includes medical questions though. Once accepted, the full life insurance amount is payable on day one, whether accidental death or natural causes.
Vitality Life - the same £21.00 per month buys you £53,047 guaranteed life insurance cover, premiums could rise. Application form includes medical questions and you are encouraged to maintain a healthy lifestyle with discounts and rewards for healthy activities such as gym membership, using their app to count the number of steps you take per day etc. You are rewarded with larger life cover and bonuses for being healthy. Once accepted, the full life insurance amount is payable on day one, whether accidental death or natural causes.
Whilst Ashley does not think that the above plans are better or worse thaneach other, he suggest that you need to think and shop around to get the best value for money. If you are over 50 and active and/or in good health then there are largest sums assured to be had for the same premium. If you are not so healthy and have medical conditions, then the classic 'over 50s' type deal may be right for you.
Why do over 50's plan work?
Quite simply, healthy people's premiums, who could have secured a better deal elsewhere, are cross-subsidising people with medical ailments. In addition, people who pass away prematurely, are also cross-subsidising those that survive the two year window with an eventual guaranteed pay out, provided premiums are maintained. In addition, if you live for long period, you may end up paying more in premiums overall than the actual life insurance sum assured. In Ashley's case, it was 28 years and 7 months.
Our Advice To You:
As with any other life insurance or savings plan, he maintains that if you wish to save money, get the right cover or invest, you should seek professional advice first. Investing a few pounds for professional advice may make or indeed save you thousands in the long run. Look at the charges and read the small print before deciding to invest. There are literally hundreds of plans that offer lower charges than these types of direct marketing life insurance plans meaning that more of your money will buy larger amounts of cover.
The above figures are based upon online quotations and comparisons completed by Mr A Clark in July 2018.