Martin Lewis: the over-50s plans with a hitch The two clauses of this seemingly innocuous legalese contain a noxious problem that needs to be writ large. Get an over-50s plan and you must keep paying month after month until you die. Yet the lump sum it will pay out is fixed. So the longer you live, the more you pay, while the amount you're due to receive remains static. Crunch the numbers Evaluating these plans requires a bit of arithmetic, often not even calculator worthy. Step 1: When you will have paid in more than it will pay out. Let's use Big Bob as an example. He's a 65-year-old in decent health, who loves darts and his family. He decides to put £5 a month aside in Axa's over-50s plan, so his children won't need to shell out when he dies. It promises £660 on death. Divide the pay-out (£660) by the monthly cost (£5) to get 132 months; that's 11 years. So by the time Bob has 76 candles on his cake, he will have paid in exactly the same as the policy promises to pay out. Step 2: What are your chances of living that long? While it's impossible to know, statistical averages give you a good idea of the risk. If you can, search through statistics.gov.uk's mortality stats - or for a ready reckoner see the life expectancy calculator at talktalk.co.uk/lifestyle/calculators. In Bob's case, the averages show a man who has reached age 65 in good health would be expected to live until age 83. Of course, no one lives an average life, so factor in your health and the longevity of other members of your family to see whether to bias longer or shorter. Never-ending payments As our Bob shows, an average 65-year-old man pays in more than he will ever get out. So if he takes a plan, the odds are bad. By age 76 he's already lost out, but it's likely he'll live a further seven years - so to ensure he gets the pay-out, he needs to keep forking out £5 a month, or £420 more. Even if darts player Bob lives until 180, with Axa he needs to keep paying - though some other over-50s plans do cap the pay-in at age 90. Now let's up this a stage. If the cash had been placed in a top savings account, or better still a tax-free cash Isa, the interest means he could have built up £660 after around nine and a half years - by age 74. These plans lock you in Over-50s plans are insurance schemes (well, technically assurance, as death is assured), so once the money is paid in, you can't get it back. Furthermore, miss one payment and it's game over - there's no pay-out. Nor would you get the full pay-out if you died within a year (in some cases two) of starting the plan. In a recent film I made on this for BBC One's Watchdog, we met Mary Vickers, aged 84. She had two Axa Sun Life policies with a combined total pay-out of £2,740 due - but she had already paid in £3,700, and needs to keep on contributing £22 a month until she dies. Worse still, while I hope Mary goes on to a ripe old age, each year the lump sum true value to her family is eroded by inflation. So what looks like a lot in the beginning risks becoming a sum that won't stretch far enough for the original funeral planned. Axa is well aware of this, which is why some existing customers have received letters over the years, asking them to top up their pay-out by taking out new plans. If you're ill, play the averages and win Having spent my column-inches so far ranting about the dangers, don't think it means that every over-50s plan is a nightmare for every customer. Understand what you're doing, weigh up the risks and you can win. While Axa is the market leader, it's not the only fruit. Some over-50s plan providers have better pay-out ratios, link the lump sum to inflation or only require you to pay in until age 90. There's no one best provider; it depends on your age and how much you pay in, so do the sums and compare. Better still, play the averages. For someone with an already diagnosed medical condition, or perhaps heavy smokers or the seriously obese, these plans can be a very good gamble, because there's no medical even though your life expectancy will be substantially lower. Pretend our fictional darts player Bob is not a healthy man and is only likely to live until 70. Even if he took Axa's £74 a month plan, it would pay out £12,085, while he'd have only paid in £4,400 - a whopping gain. Though do remember, if you died during the first one or two years you wouldn't get the full pay-out. I've got a plan already, should I cancel? Some people with plans, reading this with teeth gnashing, may be asking, "Should I cancel?" The answer isn't as simple as: "If it's a bad bet, lose it." If you stop paying now, all past contributions will be lost. Clinical logic demands you ignore all previous contributions. Do the sums as if you had started paying today, and work out if you're likely to put in more from now onwards than it will pay out. Obviously, the more years you've been paying in, the less likely it is that it will be worth cancelling. Funeral planning is important While over-50s plans aren't right for everyone, I wouldn't want to discourage anyone from helping protect their loved ones from bills. An alternative is a standard funeral plan, whereby you pay for your funeral in advance, at today's prices. However, these aren't hitch-free either. For example, a plan might fully cover cremation costs, but only contribute to burial costs and not include a church service. Plus, ask what happens to the money if you die abroad or if the funeral director goes bust. The straightforward option is to put money into a top savings account, or a tax-free cash Isa (for the latest rates, see moneysavingexpert.com/savings). Yet even this isn't risk-free - if you die early, you might not have saved enough to pay for a funeral.