James Daley

By James Daley

Companies that sell Over 50s plans quite rightly get a hard time from the media. These are insurance products that pay out a guaranteed sum if you die a year or two after taking out the policy, but with a catch. You have to keep on paying into them until you're at least 90 - and in some cases until you die. That means that even once the premiums you've paid in match your payout, you've still got to carry on paying in - possibly for decades to come.

Each time these plans are covered in a newspaper or on the telly, there's inevitably a case study of someone who's paid in at least 50% more than they're ever going to get out, and they naturally feel hard done by.

And that's not the end of it. The payouts on over 50s plans are not linked to inflation, so as you continue to pay in those monthly premiums, the value of your payout is reducing year on year. Few people end up getting back anything near enough to cover the costs of their funeral - which is what they took the plan out for in the first place.

But perhaps the biggest let down with these plans is the way they're sold. Adverts featuring trusted celebs - such as Michael Parkinson or Julie Walters - run endlessly on daytime TV. While you're captivated looking into Parkie's eyes, and dreaming the promise of a free Parker pen, the small print flashes up on the bottom of the screen. Using free gifts and celebs to punt financial products just doesn't seem right - or not unless the celebs make the downsides of these products crystal clear.

Gloria's regret

Last night's piece about over 50s plans on the One Show (it starts at around 3 minutes 15 seconds) was a significant moment. Presenter Gloria Hunniford, who was once the trusted celeb behind an ad for over 50s plans, seemed to be showing some regret that she'd ever been endorsing these products.

I thought it was a brave thing to do - and once again it raises questions about whether it's time for the regulator to get tough with companies that sell their products in this way.

Over 50s plans are not all bad

In spite of everything I've said up to this point, I don't think over 50s plans are all bad. The big advantage of them is that they're not medically underwritten - so if you're in poor health, you can still take one out. And of course, for the people who die within a few years of taking out the policy, they represent good value.

My main problem with them is that most plans are simply not good enough value - the payouts are too small and I'm not convinced that customers understand the very serious impact that inflation will have on their payout if they live for 20 or 30 years. The adverts simply don't go far enough to let people know about the downsides - and offering free gifts is just another way of taking people's eye off the important stuff.

The FSA tightened rules around this five years ago, but I don't think it went far enough. Hopefully, the new, more proactive FCA has got this sector on its radar.