Over 50 Plan or a Funeral Plan?

If you’re approaching the autumn years of your life and are thinking about future estate planning, then it’s likely you’ll be considering some of the various plans available on today’s open market.

Two of the most popular options for those approaching that important half-a-century milestone are Over 50 Plans and even funeral plans – both of which attract very different benefits.

In this article we consider the various differences between the two whilst also considering the pro’s and con’s of each.

Over 50 Plan

An Over 50 plan is basically a convenient way to leave a fixed cash sum for loved ones when you pass away.

There are many advantages attached to this plan:

  • With most plans you’ll have the option to add a funeral benefit option. This means that, in addition to being left with a fixed cash sum, your family or loved ones will also receive a set contribution towards your funeral cost.  With the cost of funerals continuing to rise year on year, this can certainly provide added peace of mind for your future financial planning.
  • Most plan providers offer these type of policies without the need to attend any type of medical appointment and there’s no age limit for taking one out.
  • Premiums can be tailored to suit your personal circumstances and to ensure that you don’t go over your monthly budget. Some policies also enable you to reduce your monthly premiums should you need to, although in some cases a minimum premium might apply so always be sure to check with your plan provider before committing yourself financially.  Also bear in mind that any reduction of your premiums will also mean your cash sum will be reduced accordingly.
  • In the vast majority of cases, the full cover is payable after just one year. This means that if you pass away during the first year of your policy then the provider will refund any premiums already paid.

That said – and as with any other type of financial product – there are also certain things to watch out for and/or check with your provider before you go ahead and sign on the dotted line:

  • Depending on how long you pay into the plan for, the total premium you eventually pay may be greater than the cash sum payable upon your death.
  • As with some other financial products (such as pensions) the Over 50 Plans don’t have a cash value and shouldn’t therefore be considered as either a savings or investment product with an element of return on it.
  • If you stop paying your monthly instalments then your plan could be cancelled in its entirety and the chances are, you won’t receive any refund i.e. you’ll lose every penny you’ve ever paid into your plan. For this reason, it’s imperative to reiterate our earlier point that you need to ensure affordability before entering into it.
  • As the cash sum is fixed, you should also remember that inflation will reduce it’s buying power in the future. If, for example, you’re incorporating the cost of your funeral into the plan, just remember that the cost of funerals continues to rise year on year so ultimately, your funeral will cost a lot more in the future as compared with today’s prices.  Consequently, these type of plans aren’t intended to meet the full costs of your funeral, but merely make a contribution towards it.

Funeral Plans

If you’d prefer to meet the entire cost of your funeral then a funeral plan might be the preferred option over an Over 50’s Plan.  Here’s why:

  • A prepaid funeral plan is an easy way of planning and paying for your funeral in advance. Unlike an Over 50’s Plan you can ensure that the full cost of your funeral is met and therefore have the assurance that your loved ones won’t have to find a considerable amount of money to pay for it; and possibly at short notice.
  • By entering into a funeral plan you have more flexibility about the way in which your funeral is conducted. You might, for example, have very set wishes about where you’d like your funeral to take place, what the transportation arrangements should be and whether you’d like a burial or cremation.  All these type of wishes can easily be incorporated into a funeral plan and will then ensure that they are carried out on your behalf.
  • There are a wide variety of funeral plan providers on the market; all of whom will offer differing packages and price ranges for you to choose from. This means that you’re absolutely clear on what you’re buying and what you’ll get for your money.

So what are the main differences between an Over 50’s Plan and a Funeral Plan?

In essence the main differences between these two types of plan are:

  • That with a funeral plan you’re arranging and paying for your funeral in advance albeit at today’s prices. This means that, when the time comes, your loved ones can rest assured that your nominated funeral director will take care of everything on their behalf and that everything has already been paid for.
  • With an Over 50’s Plan, your loved ones will receive a set cash sum which they can then use to pay for the cost of your funeral. Of course, the amount they receive may be more or less than the amount granted to them, so this might be an important consideration for you.

Where can I get further advice?

There are many providers for each type of plan on the open market and you’re certainly well advised to shop around before deciding which one might be right for you.

Another good way to compare plans is to go online, where you’ll find many comparison websites to look through and perhaps discuss with your loved ones.

As with any other type of financial product, it’s important that you understand exactly what you’re opting into and that you’re sure you can afford the repayments.  However, with the right advice and a bit of common sense, there’s certainly nothing to suggest that you shouldn’t find the perfect plan with ease.