Over-50s plans - which are usually taken out to ensure there is money for relatives to help cover expenses such as funeral costs - can pay out in excess of £2,000 less than the total amount contributed in monthly instalments by policyholders, according to analysis conducted for this Sunday Telegraph article.
It calculates a 50-year-old paying £20 a month into a scheme would receive a fixed pay-out of £7,263 on death, or if they lived to 90 - when monthly payments end - they would have paid in £9,600. If a policyholder had instead put £20 into an account paying 1.3% interest, however, they would have built up a pot of £12,100 by 90.
"The fact these plans don't ask for medical evidence means everybody of a certain age is grouped together and there is an assumption they are unhealthy," says Chase de Vere Chartered final planner Patrick Connolly. "This means healthy people pay over the odds for their life cover.
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