A new life insurance policy that has been specifically designed for people over 55, has been launched by a building society.

The new Over 55s Life Cover Plan has significant product enhancements, which have been designed to meet the changing needs of customers and includes the introduction of a Funeral Benefit Option.

The issues relating to funerals and the passing of a loved one may not be an easy topic of conversation but it is nevertheless an important fact of life which requires people to plan ahead.

For some, this means providing a small nest egg for their family and loved ones and for others, it is to provide funds to help towards funeral costs.

Demographic change has resulted in an increased number of people aged 55+ and this upward trend is predicted to continue for many years to come.

Meeting the needs of older generations

The Over 55s Life Cover Plan, which has been provided for the building society, has been specifically designed to meet the protection needs of the older generation and is now available to people aged between 55 and 80 (the maximum age was previously 75).

It includes guaranteed acceptance which, unlike some forms of life cover, does not require people to provide details of their medical history. The Over 55s Life Cover Plan also includes the following new cover options.

One of the cover services provided is fixed cover. This provides fixed premiums and a fixed cash sum payable on death after two years.

The Over 55s Life Cover Plan now includes a new feature, known as the 'Increasing Cover' option. This allows customers to increase the cash sum payable on death by 5 per cent of the starting cash sum each year. In return for providing this additional cover, the monthly premium will also increase by 5 per cent of the starting premium each year.

Benefit options for funeral costs

This Increasing Cover option is of particular benefit to customers who wish to help guard against future price rises and therefore go some way to offset the effects of inflation.

The Over 55s Life Cover Plan also includes a new feature, known as the Funeral Benefit Option. This option is specifically designed for customers who want the plan proceeds (cash sum) to contribute towards their own funeral.

In return for selecting the Funeral Benefit Option, a contribution of £250 will be made by The Co-operative Funeralcare for any funeral arranged through them when the time comes.

The Funeral Benefit Option has been introduced to provide assistance towards rising funeral costs. Research predicts that by 2014 the average cost of a funeral will have risen by 31 per cent to £3,581.

Robin Bailey, Nationwide's insurance director, said: "Most of us want to make sure that we leave our financial affairs in order after we've gone. For a lot of people, a top priority will be making sure funeral costs are taken care of."

Robin also said: "For a monthly outlay, people can have the reassurance that, even if they are in their 60s and 70s, after two years, a useful cash sum could be paid towards the cost of their funeral or provide a nest egg for their family and loved ones."