It has taken a long time for insurance companies to accept that in many areas the over 50s are a good risk. Take car insurance – go to a comparison site that compares a host of over 50s car insurance.
Another area where the over 50+ are courted by insurers is life assurance cover where premiums per month are apparently cheaper for the over 50s. Strictly speaking I have my doubts about it being a cost effective product.
The idea is that you save anything from £5 a month from 55 years to 80 or 90 in what is a ‘whole life’ cover policy and you receive a lump sum only when you die. Then your descendants use these sums to pay funeral expenses or whatever else.
Once when interest rates were high, the cost of a whole life policy didn’t look so good. It was debateable whether it was a better use of money to choose a savings account. Now with even Isa only paying 2-3 per cent, this is a poor return, but that situation could change of course when interest rates get back to normal.
Insurance companies have always pushed whole life though it is a relatively expensive form of insurance, but it is useful for those not in the best of health because there are no medicals. The idea is that someone decides they want a fixed lump sum of, say, £20,000 on death for a fixed £72 a month. If they die any time after the first two years they will receive all of the £20,000.
But £72 each month is quite a lot to save. Term insurance (for a fixed amount of time) is much better value provided you are in reasonable health because they ask health questions and may not insure. With term, for a lump sum of £20,000 (to be paid out immediately the policy is set up should a terminal illness or death occur), you’d pay £18 a month, according to InsureMe-on-Line.com, which acts as agents for the insurers.
For all the appeal of term insurance for 50+, if you ask me I’d forget about saving for something from which the saver cannot personally benefit. Life insurers remind us “life is for living” and how true. So taking out a whole life policy at the age of 50+ to finance funeral costs is a bit gloomy. Save for a rainy day by all means and/or enjoy champagne in old age. As for the funeral – many estates can manage to pay the average £3,000 in funeral expenses, or let the adult children pick up the tab, for once.