1 in 3 people over 55 not making educated financial decisions
New research* has revealed that nearly 1 in 3 Brits aged 55 plus do not understand the difference between a funeral plan and over 50s life insurance – meaning they could be making the wrong decision in relation to their funeral planning.
The survey highlighted people’s misconceptions about certain products with:
- 23.8% not understanding what an over 50s life insurance plan provides.
- 11% of respondents wrongly believing that an over 50s life insurance policy guarantees to pay your funeral costs.
- 32% unaware of the difference between a funeral plan and over 50s life insurance
Commenting on the study, Ashley Shepherd, Managing Director at Over50choices.co.uk, the leading over 50s comparison site, said
“People need to be better informed about their funeral planning options, as they could be buying a product that isn’t the most appropriate for their needs - and therefore perhaps not protecting their family in the way they had wished.
“Both plans have an important role to play but worryingly nearly a third of people don’t know what this is. Whilst a funeral plan will guarantee your funeral director’s costs, an over 50s life insurance plan will only give you a cash sum to help with funeral costs; a pot of money that will be eroded by inflation over the years.
“It’s easy for the consumer to be confused, particularly online where both types of plans are promoted under various ‘funeral plan’ terms. What is concerning is that families could be left with heartache and a financial burden that they could be paying for in years to come”.
Ashley explains that:
- the average cost of a funeral today is £3,590**,
- in 20 years time with funeral inflation this could rise to over £11,000***.
He cites an example of a 60 year old man who purchases over 50s life insurance with a cash sum of £5,000 today. Based on the figures above, if he dies aged 80, his family could be left with a £6,000 shortfall when arranging his funeral.
Ashley summarises: “The final decision for some could be down to budget. With an over 50s life insurance plan typically starting from £8 a month, they are considerably cheaper than funeral plans. Though when the time comes to make a claim on the policy, it may not be fit for purpose if the customer thought all their funeral costs would be covered.
“Whilst better consumer education is needed, the life insurance companies need to do their bit to make sure it’s crystal clear that a policy will meet a customer’s expectations.”
*Google Survey carried out on behalf of Over50choices.co.uk, February 2015
***Over50choices funeral calculator
Ashley Shepherd, Managing Director, Over50choices on +44 7977917714 or email: firstname.lastname@example.org
As the name suggests we specialise in helping Over 50s take control of their personal finances; providing information, guides and comparisons on a range of insurance products, home energy, retirement services and funeral planning options. Quite simply we give you choices – a one stop shop for all your fifty plus planning needs.
Whether you want to put plans in place with a Will, Prepaid Funeral Plan or Over 50s Life Insurance; are looking for the most suitable deal on Car Insurance or Home Insurance, or looking to make your retirement more comfortable by choosing the most appropriate Annuity or Equity Release Loan; we can help you with it all.
Managing Director, Ashley Shepherd was formerly the Marketing Director for a large insurance company and has over 30 years financial services experience.