Planning Retirement Over 50 Plans

Over 50’s Plans

An over 50’s plan offers a form of life insurance for those older than 50. The policy offers a lump sum payment if you were to pass away. You can take out the policy at any point after 50, but the later you take it, the less you receive at the end. Once you take out a policy you will continue to pay every month until you pass away, or reach 90. There are different rates again for males and females based on their differing life expectancy.

There are several plans available, so everyone should be able to find one that suits their individual circumstances.

Fixed Payment Plan

The first is a fixed payment plan. When you take out the policy you are told your fixed payment upon death and you will pay a fixed monthly payment which will not change. This will usually be paid until you die or reach the age of 90.

The plan above is very useful but, should inflation hit a record high, it could leave you with a payout that may no longer provide enough money for what it was intended for.

Increasing Plan

Another commonly used plan is the increasing plan, which increases both your monthly payments and eventual payment in line with the Retail Price Index (RPI). Unfortunately they usually increase your premiums by 1.5% for every 1% increase in final payment. So if the RPI increases by 3% in a year, the final payment will increase by 3% but the premium you pay each month will increase by 4.5%. Should you take this plan out at 50, and die at 80, with a final payment of £10,000 and an average annual inflation increase of 3% over 30 years, you would end up with just under £25,000 with an increasing scheme. You would end up with monthly payments which were nearly 5 times the original payment amount by the 80th year.

Funeral Plan

You can also take out a funeral plan, which will pay for your funeral when you die. These plans set an initial payout for the funeral which will then increase each year in line with the retail price index (RPI). As with the increasing plan, the premiums will increase by 1.5% for every 1% the RPI increases. Some plans also include cover, should the price of funerals increase by more than the RPI, giving you added assurance your loved ones will have nothing extra to worry about when you pass away.

All of these plans are aimed at those between 50 and 80 and offer guaranteed acceptance without a medical. The schemes normally pay out after two years, only paying out on accidents in the first two years. All other claims, like death through illness will pay you back your premiums already paid, usually plus interest.

Financial Responsibilities

Over 50s plans are great for when you still have financial responsibilities that would be affected should you die. The plan will leave a nest egg for your other half or children, can help pay your remaining mortgage, for your funeral, or pay off any debts you may have.

However, if you have none of these financial responsibilities and you have money set aside for your funeral arrangements already, then an over 50’s plan can be an expensive insurance policy. In fact, if you took out a policy at 50 and lived till 75, you would spend more in premiums than you would receive in the lump sum. Given the advances in health and life expectancy someone with no financial worries may find this an unnecessary expense.

Just like annuities the golden rule when shopping for an over 50’s plan is to shop around. With thousands of providers out there all offering different rates, shopping around for the best one is imperative.

Compare Over 50s Plans

Provider Premiums from Extra benefits Welcome gifts Reviews More Info
36p per day Automatically become a Foresters Friendly Society Member with access to a range of social and health benefits and financial support Full legal Will worth £199 with monthly premiums of £25 or more Read Foresters Friendly Reviews
£5 per month Early payout for terminal illness – if you’re diagnosed with a terminal illness, you can ask for a reduced benefit to be paid out early instead £60 M&S voucher Be the first to review this product and get a free Mr Men bruise soother
27p per day £250 Contribution towards your funeral costs with the Funeral Funding Option £30 in M&S vouchers
a DAB digital radio
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27p per day • Fixed rate, risk free
• You can transfer the ISA
• Tax free interest
£15 M&S voucher
£15 High Street voucher
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£5 per month • Tax free end cash pay-out
• Monthly contribution starts at only £10
• Life cover included
£30 M&S vouchers OR a DAB radio OR a Digital photo frame Be the first to review this product and get a free Mr Men bruise soother
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