Over 50s Plans

Snookems

Apologies if I'm in the wrong place to ask this - I've just joined the forum and can't see what I want to find. Does anyone know of any campaigns to retrieve 'over-payments' from Over 50 Plans? My mother took out a Sun Life policy in 2003. She has already paid in more than will be paid out upon her death and would receive only a minimal amount if she stops paying in. We've read MSE's info, so we are under no illusions as to the lose-lose position she is in. Surely it's unethical, even though it's not illegal, to except people to pay into a fund that is the equivalent of pouring money down the drain? I can't believe that no financial body has been set up to look into this.

Glad

Hi Snookems and welcome to MSE
Hi, we move threads if we think they’ll get more help elsewhere (please read the forum rule) so this post/thread has been moved to another board. If you have any questions about this policy please email forumteam@moneysavingexpert.com.
So I've moved this thread to The Insurance & Life Assurance Board

and Martin has an article on over-50s plans on the MSE main site here

Beware Over-50s' Life Insurance

dunstonh

Does anyone know of any campaigns to retrieve 'over-payments' from Over 50 Plans?

No. Whilst Over 50s plans are an option of last resort, the product does fill a gap that is needed in the market place.

My mother took out a Sun Life policy in 2003. She has already paid in more than will be paid out upon her death and would receive only a minimal amount if she stops paying in.

That is one of the known risks of an over 50s plan vs conventional whole of life assurance. Those that live the longest subsidise those that do not.

Surely it's unethical, even though it's not illegal, to except people to pay into a fund that is the equivalent of pouring money down the drain?

Date of death is an unknown. You pay you money, you take your chances.

can't believe that no financial body has been set up to look into this.

The warnings are quite clear, for those that choose to read them. If bought via an adviser, you would nearly always find an adviser would divert away from this type of product to alternatives. However, if you do not use an adviser and buy directly from the provider, as these sun life plans were retailed, then you bypass most of the consumer protections that exist. The regulator did change they way these were allowed to market themselves some years back but the product is fine for what it does.

Aretnap

The nature of all insurance products is that many people will pay in far more than they get back. I've paid thousands of pounds in home insurance premiums over the years and I've never received a penny back. I'm very pleased about that - it's because my house hasn't burned down.

Likewise with life insurance products - a moment's thought will demonstrate that not everybody can get back more than they pay in (if they did the insurance companies wouldn't last long). So it's inevitable that some people will end up paying in more than they (or their family) ever get out. They're by and large the lucky ones who live to a ripe old age. If you take out more than you paid in it's because you die young - which is presumably not what anybody is hoping for when they take out life insurance.

The principle is not unethical - it's precisely how insurance is supposed to work ;the risk is shared between many people and in effect the fortunate people subsidise the unfortunate ones (often to quite a substantial degree).

Now there are certainly problems with over 50s plans which are discussed in the MSE article - unless you're in poor health they are generally poor value compared with a more conventional life insurance policy where you'll be asked detailed questions about your health and medical history before you're accepted. However there is a role for them - some people do have health issues which make them good value, and some people just want the convenience of guaranteed acceptance without having to answer a lot of intrusive (as they see it) questions about their medical history.

With hindsight your mum would probably have been better off with a conventional plan (and she might still be, if she's in good health for her age). But the fact that she's paid in more than will be paid out on her death doesn't make the product an unethical one, still less give her grounds to reclaim the "overpayment".

[Deleted User]

Isn't the whole point of these plans that people who wouldn't get insurance because of existing health problems can get cover from £4 a month, that would pay out almost a £1000 it would take 20 years to save £1000 at £4 a month.
There are other plans where after paying in for a period you can stop and still get the payout, you just need to shop around.
And don't forget if you take out the £4 a month plan you get a free £75 voucher the equivalent of 19 months payments.

ThinkingOutLoud_2

Venison - let's see the details of the plan you cite please?

As above - there is a place for a very few to use these schemes. But the schemes are usually highly profitable for the insurer ...

Quentin

If you want a £75 voucher then one well known plan is sunlife via moneysupermarket

Money savers will be able to work out how to maximize on the offer as the voucher comes after just 3 months payments!!