Aviva life cover; feasibility of continuing paying premiums?

Black_Jack_Davey

My wife and I each have an Aviva over 50s life cover insurance.

My wife's policy costs £20/month and pays £4,143 in the event of her demise.

My policy costs £30/month and pays £5,888 in the event of my demise.

So far, she has paid £3,120 in premiums and I've paid £4,680.

Question;

There will come a time when we will have paid more premiums than what the policies will pay out.

What would you do; continue paying until the break-even day and call it quits, or continue paying forever?

If we stop paying the premiums then the policies are no longer in effect. There is no redeemable value on the policies.

I feel a bit stupid having come this far and seeing what we've paid in for so little that will be redeemed but thankfully, we haven't had to redeem them yet!

Thanks in advance.

DullGreyGuy

Black_Jack_Davey said:

My wife and I each have an Aviva over 50s life cover insurance.

My wife's policy costs £20/month and pays £4,143 in the event of her demise.

My policy costs £30/month and pays £5,888 in the event of my demise.

So far, she has paid £3,120 in premiums and I've paid £4,680.

Question;

There will come a time when we will have paid more premiums than what the policies will pay out.

What would you do; continue paying until the break-even day and call it quits, or continue paying forever?

If we stop paying the premiums then the policies are no longer in effect. There is no redeemable value on the policies.

I feel a bit stupid having come this far and seeing what we've paid in for so little that will be redeemed but thankfully, we haven't had to redeem them yet!

Thanks in advance.

Over 50s policies are typically for those that have no other option, the insurer of last resort. Unfortunately it's not always how they are marketed and people that could get regular policies for less end up buying them for the free Parker pen or carriage clock.

You need to read the terms of your policy, its certainly possible to pay more into a policy than you will receive back but some stop payments once you hit a certain age others require payments no matter your age. Ultimately this is how sub-prime assurance works, its sold to risky customers so premiums are disproportionately high, those that die young get back more than they paid in, those that live longer than expected subsides that by paying in more than they claim. 

As to what to do? This is somewhat is the mirror of the sunk cost fallacy ("I've paid in too much to stop now"). What you've paid to date is irrelevant as it's gone money. The question is do you think your premiums each are worth it going forward? How much longer do you have? If you put £50 a month into savings each what do you think it will be worth by the time you go?


What is the money actually for? The majority of people dont need life assurance, whilst younger they need life insurance but as mortgages are paid off, salaries replaced with pensions and kids fly the nest their need diminishes and hence they but term insurance rather than whole of life assurance (insurance pays out if an event happens within a timescale, assurance pays out when an event happens)

dunstonh

My wife and I each have an Aviva over 50s life cover insurance.

Over 50s plans are the option of last resort when you can no longer get conventional life assurance. (i.e. due to very poor health).  They are generally poor value and extremely poor value if your health is good for your age.  If you have extremely poor health, then they can have their place.