Beware the insurance policies with a sting in the tail
December 30, 2007
Life insurance is one of the most important and popular types of protective cover around, and many people think of this type of cover as particularly vital because it enables them to leave something behind for their loved ones when they are no longer there to provide for them financially.
Younger people can usually get life insurance at a reasonable price, with affordable monthly premiums. However, for the elderly finding low cost life insurance isn’t always easy.
As we get older we tend to suffer from more health problems, and for insurance companies we become a greater risk, which means that in order to get cover we often have to pay more money. However, in the 1980s and 1990s advertisements appeared for life insurance cover that seemed to be catering for older consumers without making them pay through the nose for protection. Even today we see still these advertisements, and for many older consumers it means a last chance to take out valuable life cover and leave something behind for loved ones.
The advertisements claim that consumers aged between fifty and eighty years of age can get low cost life insurance cover for an affordable monthly premium. No medical is required, which is a great benefit for many older consumers who may not be in the very best of health, and those signing up for the policy can even enjoy receiving a free gift. These advertisements have captured the interest of many older consumers looking for life insurance cover, and over the past couple of decades literally hundreds of thousands of people within this age group have signed up for these life insurance policies.
Indeed, the policies have come across as being very good value for money. In light of the age of the applicant and the lack of a medical check this insurance cover offered a generous lump sum upon death for a very reasonable monthly premiums, which is why so many people over the age of fifty were attracted to the offer.
However, it has now come to light that there is a sting in the tail, and this comes with the fact that the low premiums last for only a set period of time, after which the monthly cost to maintain the insurance cover rockets to sky high levels. In fact, one policyholder recently explained that when he took out the policy in the early 1990s he was paying £28.51 for a generous payout of £87,000 upon death. However, he recently discovered that his monthly repayments were rising to a whopping £269.84 a month.
Experts have reiterated the importance of checking the small print on any life insurance policy, as otherwise consumers could be in for a shock in the future if their repayments suddenly rocket, as has been in the case with these over 50s policies.
Alan Wright
30th December 2007
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