Over 50 life insurance may also go by the name of funeral insurance.
That is because one of the most common uses for the cover is to make future provision for the funeral you are likely to want when you die. Thanks to the provision you are making, your family and loved ones may be spared all or some of the expense of those funeral arrangements – at a time when their grief and mourning is likely to give them more than enough to worry about.
As a form of funeral insurance, over 50 life insurance is typically one of the easiest and most straight forward whole of life policies to arrange:
- there is automatic acceptance of your application, without the need for any type of medical declaration and whatever your lifestyle choices;
- the cost of your monthly premiums are fixed, so you know exactly the financial commitment into which you are entering, and the amount payable maybe as low as just a few pounds each month;
- you are eligible to apply for the cover at any age after your 50th birthday and until you are 75 or 85, depending on the insurer concerned;
- when you die, your nominated family member receives a lump sum cash benefit, which may be used to fulfil your last wishes for the funeral you want to be given;
- some policies also have a funeral benefit option, whereby a bonus of £250 to £300 might be paid directly to any funeral plan provider with whom you have an agreement.
But over 50 life insurance does not have to serve as your funeral insurance. Upon your death, the pay-out may be used in any way you have previously requested or that the beneficiary sees fit.
It might be used to help clear any of the outstanding debts or credit card balances you have left, help a family member whom you know to be in some financial difficulties, or simply bequeathed as part of your legacy.
One of the concerns that might often be expressed about this type of life insurance is the likely effects of inflation.
Over the years, it is argued, the real value of the money you are putting by each month in your over 50 life insurance plan is going to fall because of the effects of inflation. The sum you thought might have been sufficient to cover your funeral expenses or to help clear your debts has been eroded by the effects of inflation.
That is true, of course, but you might also want to consider the current rates of that inflation and compare them against the low rate of interest you might otherwise receive from a similar amount put by each week in a simple savings account.
Interest rates on savings accounts remain very low, but movements in the rate of inflation are also forecast to be very low too. Trading Economics, for instance, forecasts a rate of inflation of just 0.75% by the year 2020 and the authoritative OECD’s 10-year forecast also gives the UK an expected average rate of inflation of just 0.75%.
Inflation may indeed reduce the real value of your over 50 life insurance between now and its eventual pay-out, therefore, but with the rate unlikely to rise above 1% a year over at least the next 10 years, the effects may be less than you were worried about.