An over 50s plan is a type of life insurance policy designed for people aged between 50 and 85, who want to leave behind some money to help cover their funeral costs.
Unlike a funeral plan, the pay out is a cash sum that is paid directly to loved ones after you pass away.
The pay out amount is usually between £5,000 and £25,000 (maximum limit varies between insurers).
How much you can secure depends on your age, rather than any health or lifestyle factors, and acceptance is guaranteed if you’re within the specified age bracket.
Premiums are calculated based on your age and the terms of the policy.
An over 50s plan remains in place for the rest of your life, which means a pay-out is guaranteed when you pass away.
Sounds ideal at first glance - particularly if you suffer from a pre-existing health condition.
However, there are some pitfalls to this type of cover.
Insurers offset any risk by charging higher premiums and implementing a waiting period.
The waiting period is usually 12 or 24 months from the start of the policy during which natural death is not covered.
It’s also possible that with a smaller sum assured available, the amount you’re able to secure may only be sufficient to cover basic funeral costs.
In this case, you may wish to look more closely at the benefits of a funeral plan instead.
What about whole of life insurance?
Similar to an over 50s plan, whole of life insurance guarantees a cash lump sum pay out to loved ones when you pass away.
The difference is that whole of life offers a much higher sum assured (up to £1,000,000) which could go far beyond paying for your funeral.
Also, no waiting period applies, so cover is immediate.
Premiums are calculated based on your age, health, smoking status and the terms of the policy.
As medical information is required, this policy type may be more suited to those in good health.