There was a good and much-needed hatchet job on whole-life insurance in the Daily Mail last month:
Funeral plans aggressively advertised to older people – often during daytime TV ads – have been exposed as a raw deal.
More than 4.5 million people hold these plans — otherwise known as whole of life policies — which pay out a guaranteed lump sum on death.
Firms try to tempt customers with ‘free’ gifts from pens and carriage clocks to M&S vouchers. But many will end up paying more in premiums than the policy will pay out and would have been better off using a savings account.
One of the most popular plans is promoted by chat show host Sir Michael Parkinson. He has been the face of Axa Sun Life’s Guaranteed Over 50 Plan for two years.
It pays out a guaranteed lump sum on death to cover funeral expenses and other costs. A key attraction is there is no medical and it guarantees to accept anyone aged between 50 and 85.
It also comes with a car satellite navigation system, flatscreen TV or pocket camcorder, plus £25 M&S vouchers.
Some experts question whether any of these funeral plans, offered by firms such as the Co-op, Aviva and LV= are a good deal unless you’re in very poor health.
You’d have to live to only 75 with the Axa plan before you would have paid in more in premiums than the guaranteed payout. The average life expectancy of a man is 78 and 82 for women. With the best-paying policy for a 50-year-old male — Engage Mutual — you’d have to live to 83 before you’ve paid in more than you’ll get out.
But you’d still be far better off in a savings account.
700,000 people have been duped the Axa plan. Extraordinary how the contemplation of death suspends the critical faculties. The contemplation of Parky, too.
Something we at The Natural Death Centre are going to be campaigning on. A genuine outrage. Strange to be pipped to the post by the Daily Mail, My enemie’s enemy is my friend? Not quite..
No he/she is NOT, Rupert. But in its ceaseless pursuit of rectitude the Mail is, I guess, sometimes right. It’s a monkeys-and-typewriters thing.
Really good to know the NDC will be campaigning on this — as on what you so brilliantly term the standardised quirky individual funeral plan too, I hope?
Someone needs to do the math on these vile and wicked schemes. Math has never been a forte of mine, even when it came in the plural.
The article completely misses the reason why the vast majority of people take out these policies. Peace of mind, not financial benefit. Peace of mind that their family and loved ones don’t have to worry about making funeral arrangements or having to pay for a funeral. If you did just a basic amount of research, most customers would tell you this.
It is a form of insurance that unlike car and home insurance (where only a small minority ever get back more than they pay in premiums) at least everyone’s funeral policy will pay out one day.
@Simon. Yes, this is one way of doing it. The point is, it is not the most cash efficient way — there are better ways. I agree that it is a good thing to leave enough money to pay for your funeral. But why should arranging a funeral be a worry to those left behind? A great many people regard arranging a funeral as their opportunity to engage with what has happened and show how they feel about their dead person. One of the many iniquities of funeral plans is that they consign the bereaved to standing around like lemons. I can’t see where the peace of mind is in that.
@June We’re talking about whole-life insurance here, not bodily-breakdown insurance. The two simply aren’t comparable. And I take you back to the value for investment argument. Are you seriously claiming that these schemes are the best way of paying for a funeral?
I thought the idea was to pay a lump sum, or a few instalments at most, to cover your funeral director’s costs when you die – I can’t see how that would land you in the red. However, the ‘what you get for what you pay’ strand of this argument goes over my financially challenged brain – as you can tell.
But I’m happy to subscribe to any old assertion, right or wrong, even if it comes from the Daily Mail, that you’re not getting what you pay for with these scaremongering schemes if it paints them in a bad enough light to deter innocent punters being sold ‘peace of…’ no, I’m sorry, I can’t even type it without retching.
People may tell you that’s their reason (just as 90-odd percent of their relatives will tell you they were ‘satisfied or completely satisfied’ with the funeral, until questioned further, when half of them will go back on that statement), but that’s after you’ve convinced them they need ‘peace…’ in the first place, and that they can purchase ‘peace…’ in any case.
Peace, of mind or spirit or any other faculty, is an inner contentment with life, not a commodity to be traded. Dying in peace cannot be achieved by paying for it, even if dying with a reduced feeling of anxiety about others’ circumstances can, but please don’t call that ‘peace’, let alone try to sell it as such. Call it ‘pathetic hope’, and I’ll back you.
People can be made to believe – and then buy – anything; that’s how consumerism works, and it’s what funeral plans rely on for their success, supported by the public’s underlying ignorance about what a funeral actually is, and what it’s for, and what it means, and even about what they’re actually buying – have you asked them what they have to say about these things, Simon? Folk’s illusions about funerals can be astounding, even when they’ve had it explained a dozen times.
The customers’ real reason for taking out these policies, I suggest, is that they’ve been frightened into believing their funeral is going to be a massive problem for their nearest and dearest, which they then have to magically solve by purchasing ‘peace of…’ (see Charles’s succinct comment above).
If my… oh, say… my son were to die having purchased a funeral plan, my first question to the funeral director would be, ‘Can I cash it in, so as not to have to comply with its unimaginative arrangement of today’s crucially important grieving ritual for my dead son in yesterday’s ludicrously outdated and grief-inhibiting style, which excludes any contribution from anyone other than its original salesman, who was on commission and who was innocently colluded with by poor old Ashley who thought he was doing his best for me?’ And if the answer were ‘No’, I’d take his precious body elsewhere, and take out a credit card if necessary just to get away from the awful taint of commercialism he’d naively imposed on his post-mortem atmosphere for his mourning friends, in the belief I’d benefit from the scheme. I’m not the only one in this picture, don’t forget, even if I were completely broke.
Those who sell funeral plans, however innocently, may like to ask themselves about their own peace of mind, in light of others’ severe reservations about them. My assertion (and I’m not alone) is that these schemes use hype to mislead people about the real reason for a funeral, which is not to fulfil some imaginary expensive obligation but to satisfy a deep, instinctual human need to stretch ourselves, to find ourselves, in honouring our dead; which is entirely overlooked in the race to grab tomorrow’s customers from the competition without letting on that that’s your real incentive.
“Peace, of mind or spirit or any other faculty, is an inner contentment with life, not a commodity to be traded,” says Jonathan, dangerously eloquent as usual, because commoditisation is a life-denying gangrene that infects so much of our lives in the more-or-less affluent world – and it’s invading death too, or at least, how we live with death and mark it when it comes.
Commoditisation is fed and watered by marketing and advertising, which in turn are powered by shrewd psychology.
But in the financial sense this issue is surely quite simple, even to an economic simpleton such as I – if the stats suggest that you would need to die well before average to pay back what you put in to one of these schemes, then if you really think that partitioning areas of your estate to pay for your funeral brings peace of mind, then look for better interest rates that will result in this chimera being sighted sooner.
The point about being tied in to a particular form of funeral is also a clincher. I would have thought peace of mind = at least some degree of freedom in important matters such as death rites.
Well, we fall for convenience foods, why not convenience funerals? Neither nourish, but both are neat and easy. If the Mail is right and it looks as though they are, then whole-life insurance schemes are to effective death rituals what pop-tarts are to real food. They burn you and they taste like industrial effluent.
Gloria’s comments about needing to die well before average before this makes economic sense is true. The other unpleasant fact about these schemes is that in most of them if you miss ONE payment you forfeit the lot. Bear in mind that many old people are uncomfortable with direct debits, prefering instead to maintain some sense of independence by paying everything week by week at the post office, so all it needs is one untimely trip to the hospital after a fall and bingo, trebles all round at Parkie’s house.
Jeez, I didn’t know that Rupert. Sometimes the world seems a lovely place, other times it appears to be just so full to the brim with rip-off artists and high-status inviolate thieves that you just want to kick something.
“Some people rob you with a six-gun, some with a fountain pen.” W. Guthrie. And the latter are much more successful – having a field day just now.
Screw the lot of them.
I think some people need to consider that there are many opinios about these products.
Anyone who is stubborn enough to think their opinion alone is the only opinion which is correct, is potentially accusing 4.5 million people of being stupid or at least mis-guided.
I suspect (but I don’t know)that a sizeable percentage of these people are happy that they have one of these policies.
But then again, that is just my opinion!
Thank you for this bit of balance, Simon.
You know what they say, Simon: “4.5 million lemmings can’t all be wrong.”