Over 50s life insurance is sometimes compared to or confused with a funeral plan but it’s important to remember that each policy type has a different purpose to the other. After all, knowing the difference means making sure your family is taken care of in exactly the way you want them to be once you are gone.
What is Over 50s insurance and what is a funeral plan?
Over 50s Life Cover is a whole of life policy for those aged 50 or over which pays out a cash lump sum in the event of the policy holder’s death, provided the individual concerned has held the policy for two years or more. This means there’s no investment risk and you always know what your family will get.
Funeral Cover provides your loved ones with a lump sum specifically to cover the costs of your funeral in the event that you pass away and is available to policyholders of any age.
Funeral policies also vary in the levels of cover provided - some will cover the funeral director’s costs only, for example, where others pay for the burial plot and wake too. It’s also generally accepted that costs not usually associated with a funeral director – flowers or refreshments, for instance – are not covered by funeral plans.
Why might I choose Over 50s insurance over a funeral plan?
Over 50s life insurance plans are generally available to anyone aged between 50 and 80 without the need for a medical report, as are most funeral plans, which makes them suitable for anyone in later life who may be having trouble leaving a cash legacy due to their medical history, for example.
They are more flexible than funeral plans, however, as the money made available through an Over 50s policy doesn’t have to be used solely for funeral costs. Some people take out an Over 50s plan in place of dedicated funeral cover knowing that their loved ones will be able to pay for all kinds of bills and not just those related to their cremation or burial alone.
Over 50s life insurance plans also give you the opportunity to provide for loved ones not covered in your will, for example, or to help your family pay off outstanding debts or other costs which will otherwise fall to them when you are no longer there.
As long as you pay the monthly premium agreed for the period specified, the named beneficiary will receive a lump sum agreed by you at the outset of the policy in the event of your death, for use at their discretion.
Do I have to choose one over the other?
Just as some people take out multiple funeral plans, you can also choose to put more than one Over 50s life insurance policy in place too.
For some people, it can be a way of covering off costs associated with their passing which can’t be accounted for by the funeral plan they already have in place. For others, it can be a useful way of passing money on to loved ones where other assets in place are ringfenced for another purpose, or destined for another beneficiary.
If you are choosing an Over Fifties policy to help cover your funeral costs, it’s also worth bearing in mind some providers may also stipulate these are covered subject to certain contributions being made by your loved ones via the appointed funeral director.
To compare the Over 50s Life Cover options available to you, or to find out more about switching your existing policy, call our GOF helpline on 0800 088 2151 and speak to an ActiveQuote adviser today.