'Beware the ‘Over 50 Sun Life Axa Plan’... blog discussion

124678

Comments

  • MSE_Martin wrote: »
    I disagree I think its a very fair comparison.

    You can self insure your home too and need look at the same equation.

    Taking your "my house burned down' example. Lets say buildings insurance would pay out £100,000 and your premium is £200 a year.

    That means it would take 200 years to build up the same pot. Yet with Sun Life its just 8 years (for 65 man in my blog) and therefore on average as most people live much longer its not worth it.

    You are quite right, the trade off is a more money if you die within 8 years for less money if you die after 8 years. For most people though that's a bad bet as they're likely to live substantially longer.

    It's not 8 years to 'breakeven' though. A more appropriate comparison would be to put £6 in the bank and pay a monthly premium from that equivalent to the cost of £570 less accumulated to date x chance of dying in the month. That premium will eat into your monthly £6 in some shape or form so you're going to take longer than 8 years to reach £570 on the 'pure savings' side. You're not giving the chance of dying and the insurer having to pay a shortfall any value or cost at all.
  • jamesd
    jamesd Posts: 26,103
    Name Dropper First Post First Anniversary
    Forumite
    edited 20 October 2010 at 3:26PM
    Lovingthisboard, someone who reads this site is likely to start out with an emergency fund that can cover the capital cost of a funeral from day one. Use for an emergency fund after death is very limited and funeral costs are one good use for it.

    portlandboy, you normally solve that problem when you take out an insurance company by using an expression of wish form to indicate who should receive the insurance payout from an insurance policy held in trust, the normal type. Since the insurance policy pays outside the estate it's not dependent on probate.

    Presenting an undertaker's invoice and death certificate to a bank that holds an account in the name of the deceased person and asking for a cheque to be sent to the funeral director to pay the costs is still likely to be faster.
  • This policy is a real con my father took it out in May 2004 and paid £36 per month until he passed away in April 2010 which is a total of £2520 and all they paid out was £940 which is terrible, I cant believe that he would have taken it out had he known the result, he did it so my mum would not have to worry about the funeral costs but it paid for less then half of it people need to be warned about this con
  • jamesd wrote: »
    Lovingthisboard, someone who reads this site is likely to start out with an emergency fund that can cover the capital cost of a funeral from day one. Use for an emergency fund after death is very limited and funeral costs are one good use for it.

    I'm not extolling any virtues of this product. I'm just making the theoretical point that you can't compare savings and insurance products so simply.

    'Survivors' do badly from assurance and well from annuities, and vice versa. If you're a financial 'loser' in a contract, you subbed someone who was a 'winner' - the insurer didn't magic their 'extra' out of the air, a share of it came from your pot and those of other survivors. Naturally it won't be an exact match, they'll work their numbers and prices so there's money left over for their profit/expenses/contingencies etc.

    What is their overall margin/profit on this contract? You'd need to see Sun Life's books for that. No underwriting even if a reduced payout in the first 2 years does throw yourself open to deathbed clients - if this loophole was fully (and only) exploited they'd get smashed.

    Chances are it's not. It's a low end product thrown open to the mass market with a friendly celeb and introductory gift and likely an impulse (but well intended) buy because it's so easily set up (no intrusive questions/medical). I'd steer away from most products that market themselves in this way unless I (unfortunately) fell into one of the categories that could exploit the total lack of underwriting.
  • OH and I discussed plans such as AXA Sunlife and quickly concluded it's a raw deal, especially if you are under 65. We have opted to put money into a savings account specifically for the purpose of funeral costs. If we could afford the lump sum we'd do what my mum's done and pre-pay with Co-op Funeral Bond - her funeral and burial (including headstone) is completely paid for including service in a church as she wishes. It is guarantees to keep up with inflation too. This has given her real peace of mind.

    I'm particularly angry with the suggestion in the AXA and similar ads that it can help with unpaid bills, because it can make people panic unnecessarily. When my dad died we discovered that any outstanding bills in his name alone would be written off as the debts weren't ours, or even our mother's. I assume this is still the case?:mad:
  • For the last couple of years I have shouted at my telly when ever one of these 'con'surance adverts comes on - the glibly smiling celeb playing on your feelings and talking (but NOT SAYING THE WORDS WHICH CRAWL ACROSS YOUR SCREEN). It is all there in words but telly is visual and those celebs surely wouldn't be part of a 'con' would they ?
    Remember all insurance companies are just 'bookies' they bet that something won't happen and you bet that it will.

  • You (and the majority) mightn't have died but some did and your monetary loss was effectively their monetary gain. Insurance is a pooling of experience (some take from the pot, some give to it and the insurer prices to hopefully make an overall profit by analysing likely mortality experience allowing for anti-selection, and admin/marketing expenses, supervisory reserving requirements etc)

    It's like saying my house hasn't been burgled or burned down therefore all my house insurance premiums have been a waste of money (and I should have put them into the bank instead - I'd now have a good few grand + interest). You have of course 'lost' if the event didn't happen but as said above you got piece of mind for 'what if'. Meanwhile someone did claim for £10K having only paid a few hundred in total - you and many others subbed that, that's insurance!

    No, that is a perfect analogy for a 'bookie' - you have to work out what the odds are of winning £10k on a single bet - as opposed to someone betting every week.

    I've no objection to the insurance companies making a profit and offering some reassurance, but those adverts are pure 'con' - the celeb talks smilingly to you - 100% eye contact - while the actual facts slither across the bottom of your screen. Ethics old boy, ethics...
  • I work as a Financial Adviser in an organisation that provides the Over 50 plan and also medically underwritten AXA Whole of Life insurance. We always go for the underwritten cover as it is much less costly. The only people who take the Over 50 plan, have some health issue which stops them getting the other cover.

    Every customer who takes and over 50 plan has to be made aware they could pay more in than they get out. Clients are called afterwards to ensure they are aware of this.
  • Stuart_W
    Stuart_W Posts: 1,719
    Name Dropper First Post First Anniversary
    Forumite
    pollydan wrote: »
    I read with interest the comments on the Sun life Axa over 50 plan as i was about to start one of those plans, I am coming up to 63 and have had ill health and find it impossible to find insurance that is within my financial reach, and was wondering if any of your readers could suggest anything that would cover funeral expenses as i do not want to leave the burden on my family.
    thanks

    The Co-op, and other funeral directors, provide pre-paid funeral plans, which cover funeral expenses - including any rises in those expenses, so you can be assured that your funeral will be paid for. It provides peace of mind, and following the death of my father, my mother took one out so she knew that no matter what else happened with regards her estate, the funeral expenses would all be covered.

    There are two ways to pay - one is a fixed upfront prepaymrnt (which can be split into installments), another is a fixed amount each month for the rest of your life, but you need to have paid in for at least two years, and has the potential to be as bad as the AXA plan - but at least in this instance the "value" of what you get is increasing as funeral cost increases are fully covered, but the pay upfront plan seems better to me.

    NO matter where you live, you can apply direct to the Anglia Co-op (who offer cheaper prices than the national co-operative group) and you get the same product, provided by your local co-operative funeral director at the time needed)
    The typical bronze package is £2520 up front, or £210/month for 1 year (interest free) or £80/month for 3 years.
    http://www.angliacooperative.co.uk/main_funerals.asp?content=preplan

    The "higher risk" option for a 63 year old woman would be £24.83/month for the rest of your life.
    http://www.co-operative.coop/funeralcare/funeral-plans/pre-payment-plans/Set-Funeral-Plans/Pay-by-fixed-monthly-payments/

    Hope this helps.
  • jamesd
    jamesd Posts: 26,103
    Name Dropper First Post First Anniversary
    Forumite
    Stuart_W, prepaid funeral plans are one of the worst deals around, so brace yourself for a Martin blog entry pointing that out. :)

    Lovingthisboard, there's an element of cross-subsidy there but Martin's comparison does a good job of illustrating how bad the deal is using the payback time to explain it simply.

    Were I Martin, what I'd be doing is what he's in effect suggested here: save he money and use your emergency fund, something he also advocates having. This combination is part of the route to being better off overall.

    The house insurance problem is a tougher one for most people because it's a rare event and the chance of having sufficient money to pay the bill is much lower for rare but extreme bad events.
Meet your Ambassadors

Categories

  • All Categories
  • 342.5K Banking & Borrowing
  • 249.9K Reduce Debt & Boost Income
  • 449.4K Spending & Discounts
  • 234.6K Work, Benefits & Business
  • 607.1K Mortgages, Homes & Bills
  • 172.8K Life & Family
  • 247.4K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.8K Discuss & Feedback
  • 15.1K Coronavirus Support Boards