Here at Shepherds Friendly, we understand how daunting it can be choosing how to save for your future, or the future of your loved ones. As we are looking at all things “over 50” this month, we have been talking to a financial adviser about everything we wanted to know about Over 50s Life Insurance, from how it works to how it differs from savings plans.
Keep a look out for our other “Over 50s” features this month, including an Over 50s Jargon buster, an Over 50s technology guide and don’t forget to check out our twitter page for great discounts and money saving tips for everyone over 50.
What is Over 50s Life Insurance?
The Shepherds Friendly Over 50s Plan is a ‘Whole of Life’ insurance plan with guaranteed acceptance and a guaranteed insurance payout, after a member has paid into the plan for a full 24 months.
Why would someone take out an Over 50s Life Insurance?
We all want to make sure our family is taken care of, even when we are not able to be there to do it. The Shepherds Friendly Over 50s Plan provides a method of leaving a legacy for your loved ones to take care of expenses such as funeral costs, leaving you with peace of mind knowing your family will receive help after you’ve gone
How does it work?
The Shepherds Friendly Over 50s Life Insurance Plan is a life insurance policy designed to provide a cash lump sum upon death, with the option of an additional £250 of funeral benefits. The plan can be taken out by anybody between the ages of 50 and 80. Payment for the plan is made by making a regular monthly amount, which can be set between £10 and £50, with premiums payable until the age of 90. The policy provides cover for the whole of the policyholder’s life, and there are no medical questions – so acceptance is guaranteed. Once the member reaches 90, the premiums no longer need to be paid per month but the agreed lump sum payment will still be made at the time of death.
If the policyholder dies and the plan has been in force for less than two years and the death is from natural causes, then the plan will not pay out the sum assured but instead one and a half times the total premiums paid to date.
Is that not just the same as a savings plan?
There are key differences which are central in deciding how you would like to plan for your future.
Life insurance provides the peace of mind that once the policy is fully in force, a lump sum will be paid upon the death of the life assured.
However, with Whole of Life policies (Over 50s Plans), there is a point at which the total that you pay in (your premiums) exceeds the level of lump sum insurance that will be paid out, and like most other life insurance plans, it has no cash-in value.
With a savings plan, such as a Cash ISA, it takes a number of years to build up a lump sum, and so in the intervening period there is no peace of mind that if the worst was to happen, sufficient funds would be available, however there is the reassurance that all contributions remain the saver’s.
John Smith – Age 55 – Non Smoker
Budget: £50 per month
John wants to provide £8,000 for funeral costs and leave a legacy for his grandson Luke in his will.
Over 50s Plan
£50 per month premium
£18,590 sum assured (after 24month qualifying period)
This option provides John with £8,000 to cover funeral costs and a £10,590 legacy for his grandson Luke.
*by age 86 John will have paid in premiums equivalent to his sum assured
**at age 90 John will stop paying premiums but will still be covered for the whole of his life
£50 per month (cash ISA) saving
2% p.a. interest rate
After 24 months John will have saved £1225.09.
It would take 24 years and 3 months for John’s savings to be worth £18,590 (equivalent to the Over 50s Plan sum assured)
You can find more Over 50 Life Insurance case studies here.
How to apply:
Over 50s Life Insurance applications can be made directly via Shepherds Friendly’s website or via an Independent Financial Adviser.
Why choose Shepherds Friendly?
Shepherds Friendly Society is a mutual, which means it is owned by and run for the benefit of its membership. You can be sure as a member you will always receive fair and ethical treatment from us. The Society is much smaller in comparison to the big banks, so you can also be confident that you will receive a highly personalised service including a dedicated financial adviser should you need one.