Sainsbury's over 50 plans last for the rest of your life and are a form of life assurance - meaning a pay out is guaranteed.
The pay out from an over 50s plan is commonly used to fund a funeral and/or provide a cash gift for loved ones.
With all Sainsbury's over 50 plans no medical information is required. You're guaranteed to be accepted if aged 50 - 80 and a UK resident for at least 183-days a year.
There's a 1-year waiting period, meaning if you were to die within the first 12 months of the policy a pay out would not be issued unless death was caused by an accident.
However, if you were to die within the first 12 months of the policy, all premiums paid to date would be returned to your loved ones.
At the age of 90, premium payments cease but cover continues for the rest of your life.
It's possible to have in place multiple over 50s plans with Sainsbury's (or namely Legal & General) but the total cash sum of these policies must not exceed £10,000.
Sainsbury's offer 2 types of over 50s plan; fixed and increasing:
Fixed over 50s plan
With a fixed over 50 plan, the premium cost and sum assured remain fixed throughout the policy term.
Whilst this is great for budgeting (especially if living off of a fixed income pension), it does mean that due to inflation the real terms value of your pay out may have declined.
However, a fixed over 50 plan from Sainsbury's does allow you to reduce the cost of your premiums (and thus your sum assured) should your financial circumstances change.
Increasing over 50s plan
With an increasing over 50s plan, your premiums and sum assured are reviewed annually and adjustments made accordingly.
On a yearly basis, your sum assured is reviewed in line with changes to the Retail Price Index (RPI). This means that the value of your policy doesn’t decline as a result of inflation.
However, your premiums will also be reviewed annually and will increase by 1.5 times the change in RPI to account for the increased sum assured.
The average cost of a funeral has risen by +122% over the past 15 years, which is significantly higher than the current rate of inflation.
Therefore, even though your cover level is adjusted, it still may not cover the full cost of your funeral should rates continue to rise at the same pace.
It's possible to decline the increase to premiums and sum assured upon annual review, however, this does remove the option for a further increase in the future.
As a result, your policy may be of less value dependant on the ongoing rate of inflation.