Axa Sun Life Over 50 Plan Review.
The Axa Sun Life Over 50 plan is the most popular whole of life guaranteed acceptance plan bought directly. (ABI statistics, Q1 – Q4 2011.) It is also known as the Axa Over 50 plan. We think that most of those people probably made a mistake. They would have been better off with a proper prepaid funeral plan. At least a prepaid funeral plan is going to actually pay for a funeral, rather than just a lump sum which would have paid for a funeral 20 years before, when the plan was taken out.
But what of the Axa Sun Life Over 50 Plan?
The Sun Life Over 50 Plan offers a guaranteed fixed cash sum (i.e. it does not go up with prices or costs) and you don’t have to answer any health questions. You don’t have to with a proper prepaid funeral either.
The “Guarantee” is often thought to be to cover funeral costs, but Axa have never claimed any such thing, just that the fixed death benefit would be paid out on your death, as long as you have maintained premiums throughout and don’t die in the first two years. If you do not do so, you have wasted all the money paid in so far, which could exceed the cost of a funeral.
If you are aged 50 – 85 and a UK resident, the Axa Over 50 Plan guarantees to accept you
If you die in the first 2 years, the Axa Over 50 Plan will pay back all the premiums paid, plus half as much again – which is better than most!
The fixed premiums from £4 to £74 a month as long as the death benefit is not more than £20,000, and as with any life insurance, those who die early make a “profit.” Those who die late and especially those who can no longer afford the premiums every month, subsidise them and pay all of the Axa Over 50 Plans running costs and profits.
As the Axa literature says: “You simply need to keep paying in every month throughout your life, as if you stop paying, your cover will end and you won’t get anything back . Depending on how long you live, the cash sum paid out could be less than the total amount paid in premiums.”
Let’s work out an example, taken direct from the Axa Over 50 Plan website. They chose to use a female to quote, as the figures look better at the time of writing. Shortly the EU loonies will force them to equalise rates for men and women, which will inevitably mean that the Axa Over 50 Plan will become much worse value for women, That’s political correctness for you!
Anyway, our female takes her Axa Over 50 Plan out at the age of 65 at a cost of £14 a month for a death benefit of £2,650 which would currently pay for a cheap funeral in many parts of the UK.
Over 20 years, the current value of the Axa Over 50s plan will reach the dizzying heights of £0 – there is n cash value except on death. In 20 years she will have paid in £3,360. If funeral inflation has been just 5% over that period (and it is currently 8.7%) then the cost of a £2,650 funeral today will have risen to £7,188.50. So your relatives will have to find real buying power of the Axa Over 50 Plan will be left to fin over 63% of the funeral costs, a whopping £4,538.50. So the Axa Over 50 Plan will contribute just over one third of the costs. Had the same amount of money gone into a prepaid funeral plan, the full funeral directors fee would have been covered. However, if you had chosen to pay monthly, the contributions would have been higher but over a maximum of ten years.
The Axa Over 50 Plan – our Verdict
Of its’ breed, the Axa plan isn’t bad. We just think this type of plan was never designed to fulfill peoples expectations of it – if they read and understood the literature, very few Over 50s plans Axa or otherwise would be sold – in our opinion. There are better alternatives, so if you are keen to get started, please give us a ring on 01323 74044. Not ready to invest yet? Download our funeral fact find to get you thinking about the options, and just return it when you are ready to go.