Funeral plan or life insurance?

catfish50

huckster wrote: »

As products vary, as do individual requirements, you are probably best to seek advice from a local independent financial advisor.

Thanks for the advice but I've learned enough from all these helpful replies that I feel I can now make a decision.

dunstonh

catfish50 wrote: »

dunstonh, sorry to be thick but I'm lost. If I bought a single premium whole of life assurance plan guaranteed to pay out £y, why would the rate of return be lower the longer I lived? If I died immediately, wouldn't I have paid out more than the beneficiaries would receive? There's something I'm not understanding.

Lets say the premium costs £5000 and the sum assured is £20,000. That is cast in stone at the start.

So, if you die in year 1, you make a £15k gain in one year. if you die at year 10, you make a 15k gain in 10 years. The level of gain is the same but each year you live you dilute the annual equivalent return.

catfish50

dunstonh wrote: »

Lets say the premium costs £5000 and the sum assured is £20,000. That is cast in stone at the start.

So, if you die in year 1, you make a £15k gain in one year. if you die at year 10, you make a 15k gain in 10 years. The level of gain is the same but each year you live you dilute the annual equivalent return.

Got it. Thanks very much for the explanation.