Retired teacher James Young thought he was doing the right thing for his family by taking out an insurance policy to pay for his funeral.
But seven years later, the now 90-year-old has succumbed to the over-50 plan – he lost £1,270 – and started saving again from scratch.
Over-50 plans promise a flat lump sum payment upon your death, which is usually intended to cover funeral costs—as long as you continue to pay a monthly fee.
Stop Taking Their Losses: James, Dorothy Young, and the Politics of SunLife He’s Giving Up Now
James, who is deaf and visually impaired, made the difficult decision to drop his SunLife policy after realizing he had paid far more than his family would have received at his death.
He took this policy in 2011, and a monthly direct debit of £22 saw him hand over £1,826 – 44 per cent more than the funeral payments. “It’s like a punishment for living longer,” says his wife, Dorothy, of 79.
The Financial Conduct Authority (FCA) last week raised concerns about this type of policy – warning that product promotions are often misleading.
The city watchdog said clients may think the plans will cover the full cost of the funeral when in reality they will only pay for a portion.
With the average funeral cost estimated at £4,271, according to SunLife, James’ plan would have covered less than a third of the final bill.
James, who lives with Dorothy in Northallerton, North Yorkshire, signed up for the Guaranteed Over 50 scheme after a SunLife newsletter arrived at his door.
The couple, who have four children, thought it a good idea to set aside some money for James’ funeral since he is more than ten years older than Dorothy.
But it wasn’t until October of last year, when Dorothy was checking her bank statements, that she realized they were still paying for it.
When she called SunLife, an employee told her that they would face debt collectors if they canceled.
When she complained, SunLife sent a letter assuring her she would not be hounded by debt collectors, but assured that payments would be forfeited if the payments stopped.
In the end, the couple decided to go ahead with eliminating the policy and have now set up an ISA to provide for funeral costs instead. Dorothy adds: “We just want to cut our losses and stop paying, as a matter of principle.
“We don’t want to keep giving our money to SunLife.”
The city watchdog said clients might think an over-50s would cover the full cost of a funeral when in fact they would only pay for a portion.
Janet Maxpaden, 81, from Hamilton, South Lanarkshire, signed a SunLife scheme in January 2009 to pay compensation of £890 when she died.
She was a mother of two, her husband is in a care home, delivered £9 a month and now pays £1,071. But she will lose everything if she stops her payments.
“I didn’t know that I could end up paying more than the payments,” says Janet, who ran a haulage business.
I feel like I’ve been robbed. They should not be allowed to get away with this.
Widower Eric Parkinson, 85, feels trapped in his politics.
The 85-year-old has been paying £15 a month on his 55+ plan since 2009 – a total of £1,725.
Unlike most policies that require customers to keep paying until their death, he’s obligated to pay his monthly premiums through April 8, 2023 — the plan’s final anniversary before his 90th birthday.
By this point he would have paid £2,490 in the policy – more than double the £1,220 he had been promised.
He had six children with his late wife, Maureen, a former nurse, and they both made plans for peace of mind.
But when Maureen died at the age of 79 on their wedding anniversary in 2013, £1,780 did not cover the cost of her funeral.
“It’s a rip-off for the over-50s as far as I’m concerned,” Eric adds.
Complaints website Resolver received 117 complaints about SunLife in the first six months of 2018 – up from 105 in the previous six months,
‘The fact that a steady number of people complain each year that they didn’t realize they could pay more than they could get out of it shows that the warnings about these products need to be made clearer,’ says Martyn James, of Resolver. “
He adds that it’s always a good idea to inquire about your policy with the company if you’re interested.
If you feel her response is insufficient, you can contact the Financial Ombudsman on 0800 023 4567.
‘As with any insurance, it is possible to pay more than you will get back,’ says a SunLife spokesperson. We make this very clear, and when a customer buys, we tell them – based on their current age and the premium they’ve chosen – exactly what they’ll be when they’ve paid more than they’ll get.
We also make it very clear that if someone stops paying their premiums, their insurance cover ends and they get nothing.
SunLife also says customers can set their own premiums.
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