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Shepherds Friendly Over 50s Life Insurance Review

The Shepherds Friendly Society is one of the longest-running insurers in the world!

shepherds friendly logoIn 1826 they started out by setting up as a mutual, and they remain the same today, despite having tens of thousands of members. They started out for the people, by the people and operate the same today. As a mutual.

It feels wrong to delve into The Shepherds Friendly Society without giving you their backstory because, for over a century, they’ve stuck to the same core principles.

When they started up back in 1826, there was no state money for the poor. Mutual aid organisations were set up in communities by locals, with Shepherds Friendly, – called Ashton Unity at the time as they started out in Ashton-Under-Lyne –  being among the first in the UK to establish the mutual organisation. It was just a local group of people who’d pay a small fee each month to the mutual fund. The funds were to be used to help those affected by illness and death, to prevent them falling into further financial hardship. The company started out similar to the Credit Unions we see today, only focused on insurance rather than savings.

How Do Shepherds Friendly Plans Compare Against Other Life Insurance Companies – Quick Quote Form

Shepherds Friendly Evolves into Financial Services Firm

As the insurance industry has grown over the past century, so too has Shepherds Friendly. They’ve expanded their insurance offerings into a variety of sectors, and despite being highly successful, they’re one of the few who hasn’t merged with another firm and brought aboard shareholders. They remain today the same type of trust they started 185 years ago.

How the Shepherds Friendly Over 50s Plan Works

The plan is open to anyone between the ages of 50 and 75 years old. They offer a guaranteed acceptance to those in that age group. There aren’t any medicals or health questions to be answered. The other guarantee you have is that there will be a pay-out.

The Over 50s plan is a Whole of Life insurance policy, sometimes referred to as an assurance policy. Whatever the sum that your policy insures you for, that’s how much your family will receive after your death.

The Whole of Life term is only valid if your policy remains active. When you reach the age of 90, you stop paying premiums, however, remain covered.

The guaranteed cash lump may not be for the whole amount that you’re insured for. The first two years are sort of like a provisional period when you are covered, but at the same time aren’t.

If you were to take the policy out and die within the first two-years of the policy start date, your family would not receive the full amount of your cash-value stated on your life insurance policy. Instead, deaths occurring within the first two-years of signing up, the family receive 150% of the premiums you’ve paid into the fund.

The Application Process

The application process is simple. It can be done online, or over the telephone.

At the time of applying, you will be asked if you’re a smoker or non-smoker. The reason for this is that non-smokers get preferential quotes in the form of lower monthly premiums. That’s just because smokers are at a higher risk of dying younger.

In any case, the Over 50s life plan from Shepherds Friendly will guarantee acceptance provided you’re in the age group 50 to 75 years old and are a UK resident.

As soon as your policy begins, payments must be kept up to date. If you miss your payments, Shepherds Friendly has the right to cancel your policy. All insurers do the same, so it’s important to think about your quote before you take the offer.

About the premiums

Cover starts from £10 per month. This is slightly higher than others begin, however at the top end of the premiums scale for Shepherds Friendly is £50 per month. This can be lower than the cost other insurers charge for similar plans. For those in poor health, the premiums can be higher than £50.

Free Funeral Benefit Option (that you may want to leave alone)

Working in association with Shepherds Friendly is Golden Charter, which is among the top funeral plan service providers around the UK.

When joining Shepherds Friendly, you’ll be asked if you’d like to include the free funeral benefit, which is £250 towards the cost of a funeral. If you do agree to this, it will be a funeral director from Golden Charter who gets paid, and they’ll be the company to organise the funeral. The £250 does not go to your beneficiaries. The Funeral Director will take his or her fee from the insurance money paid by Shepherds Friendly. If it’s short, your family would be required to top it up. If the funeral costs less than what the insurance policy pays out, the funeral will be paid first and what’s left will be paid to your beneficiaries.

Tax advice is not included and should be sought

This is dependent on how much your insurance policy is worth. It should be considered in addition to the value of your estate. If it’s over the threshold, your family may be liable to pay inheritance tax. Tax advisors can work with you to set up your estate in the most tax-efficient way.

What’s Different about the Shepherds Friendly Over 50s Life Plan?

Preferential rates for non-smokers, a long-established history in the financial services sector and they re-launched the Over 50s plan in 2013, at which point a lot of the sums people were insured for through the policy were raised. Not the premiums, the pay-outs.

Shepherds Friendly is an insurance provider that is worth getting a quote from and comparing it to what others are quoting. They do have starting rates a few pounds per month more expensive than some other Over 50s plans provide, but they also offer a higher level of cover. It’s a balancing act, which is best determined by how much protection you need.

Keep in mind…

  • The level of cover (cash sum amount) of your policy is fixed when your policy starts. The Shepherds Friendly Over 50s Life Plan is not index-linked. Therefore it will not rise with inflation. If you live for another 25 years after taking out the policy, chances are, it’ll be worthless, in real terms, when it’s paid out.
  • As the premiums are going to be paid until your 90 years old, there is a chance that you’ll pay more into the fund than your family will get back. This will mainly affect those who don’t keep in good health, who subsequently find their quotes high. If you’re quoted the high-end of £50 per month, that’s £600 each year. £6,000 in ten years. Taking out the policy at the age of 50 for a level of cover worth £4,500 you could have saved that £50 for 7.5 years to get the same amount. If you invested it, you’d potentially have more. It is possible to pay into the fund more than the insurer will pay out. You pay the premium up until your 90th birthday, regardless of whether you’ve paid up to the total amount that the policy will pay your family. If that does happen, there’s no cash in value. If you stop paying your monthly premiums, the policy will be void, and you get nothing.
  • You won’t be getting insured for vast sums on a guaranteed Over 50s plan. The objective of these is to pay for funeral costs. If you need a level of life insurance to cover outstanding debts, expenses, mortgage payments or car finance it’s unlikely this type of plan will be sufficient.

Being Over 50 Does Not Exclude You from Regular Life Insurance of Any Type

The Over 50s term can be misleading. It does not mean that if you’re over 50, you need one of these plans. That would be age discrimination.

The Shepherds Friendly Over 50s Life Plan will provide preferential rates to non-smokers. However, being a non-smoker can indicate that you’re in good health, or at least in better health than a smoker would be.

If that is the case and you are in good health with no existing health conditions, you would be best served getting quotes for two types of life insurance, either term or whole of life (or both) and a quote for over 50s. You can find that the amount you can get covered for is significantly higher on a general life insurance policy than it is on an Over 50s plan. Often is the case with these plans is you’ll get enough cover to save your family the expense of a funeral. Once that’s paid by the insurer, they get the change that’s left over.

For those without health concerns, there’s no reason not to check out what other types of cover you can get. You could be cutting yourself short by not exploring all your options.

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by David from Glasgow on IH
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