Specialist insurance aimed specifically at older people is on the rise – financial writer Kara Gammell asks if the sums add up
There is now a plethora of financial products and services aimed at older consumers, with everything from insurance policies, savings accounts and credit cards on offer. And with the number of older consumers set to rise over the coming years, it looks like there’s no end in sight for the number of firms offering products aimed at this section of the market.
Don’t get sucked in by marketing
Many of these products are marketed to make people feel that they’re getting a special deal because of their age. But do these financial products and services marketed at the over-50s always provide good value? Would older consumers actually be better off choosing deals offered to those of all ages?
"When it comes to savings and insurance products for those at retirement age, I think it is important that they do not get taken in by the niche marketing of products towards their age group,” says Alison Steed, founder of MyMoneyDiva.com, a personal finance website for women and families.
“Older consumers should instead take the products at face value and compare like-with-like to ensure they get what is best for them.”
Age doesn’t always have its rewards
When it comes to insurance, your age can have a significant impact on your premiums. Insurers balk at covering older travellers, because statistically they are more likely to make a claim, either for medical treatment abroad or for a holiday cancelled because of ill health.
But rather than going up gradually each year, premiums tend to jump every five years.
Most insurers will lump all 60 to 64-year-olds together, so once you pass your 65th birthday you are in a new age band and will be priced accordingly.
The industry argues that with greater age comes greater risk and that some firms cannot accommodate ‘riskier’ customers in their business model.
“You may need to get a specialist insurance policy because some insurers will not offer cover to those over a certain age,” says Alison.
Getting specialist insurance
You may also have more medical conditions that need to be taken into account as you get older, so these may lead you towards a policy designed specifically for your age group.
"However, other policies that are not specifically targeted may still cover you and could be cheaper,” Alison adds. “It is crucial for older people not to get pigeon-holed by marketing men who have a different agenda to their own.”
Failing to disclose a medical condition might get you cheaper insurance in the short term, but you could be left without crucial cover should something go wrong. Honesty is the best policy in this situation!
Renewing car insurance
When it comes to car insurance, age-specific policies are not always the cheapest option for older customers. In fact, according to an analysis by Which?, the consumer group, some specialist insurers are quoting car insurance rates four times higher than the most competitive deals for the same age group.
On car insurance, Which? approached a range of ‘regular’ and specialist insurers for quotes for a 60-year-old driving a Ford Focus. It found a number of quotes from ‘regular’ insurers around £180, compared to quotes of between around £250 and £330 from a range of specialist insurers. Of the six cheapest quotes, only one was from a specialist.
Similarly, for a higher-risk 70-year-old driver with a BMW 120d, Which? received quotes from regular insurers of around £370-400, compared to quotes in the region of £1,150-£1,450 from specialist over-50s insurers.
Price comparison websites such as Moneysupermarket.com, Confused.com and GoCompare.com are a good place to get an overview of the market.
Using an insurance broker to help find the best policy can also save on premiums. The British Insurance Brokers' Association's ‘find a broker’ service provides free access to specialist providers – see biba.org.uk or call 0870 950 1790 for more details.
Top 5 tips for cheaper insurance
- Shop around and compare deals – use price comparison sites or call insurers directly for a range of quotes
- Look beyond older-people specific products – often, ‘regular’ insurance can be cheaper while offering the same cover
- Don’t just auto-renew – when your policy comes up for renewal, look for a new quote rather than just rolling it over for another year
- Pay upfront if you can – paying off a policy in one go is often cheaper than making monthly or quarterly payments
- Ask to beat a quote – if you have a good quote, don’t be afraid of asking other providers to match or beat it
Read more like this:
- Getting travel insurance with pre-existing conditions
- 5 simple tricks to make over your finances
- Financially stretched retirees fear unexpected costs
This article has been commissioned by retiresavvy and any opinions voiced are the author's own.