Should over 50s take out specialist insurance?

Whether you are looking to insure your home or your car, or are jetting off on holiday and need some travel insurance, there are a handful of specialist insurers offering products specifically designed for the over 50s.

By only offering insurance to an older clientele these specialist insurers claim to be able to offer better terms, but is this just a marketing gimmick or can they genuinely save over 50s money or provide cover that is more tailored to your needs?

According to the specialists, the real edge they have over standard providers is underwriting expertise - which, in theory, should allow them to price their products more keenly. 

Using the example of motor insurance, Roger Ramsden, chief executive of Saga Services, says: "The reason this market was invented was because of the market insight we had. By separating out older drivers, we are able to help keep costs down. Generally, experience leads to lower levels of accidents and where they do occur they're more likely to be minor."

Cross subsidising

Phil Nichols, head of product management at RIAS, agrees. "As we only deal with over 50s we know they are safer and more experienced and generally tend to claim less regularly. We know retired drivers will be doing most of their mileage outside of rush hours and that they will be doing less mileage over the year."

The key benefit of targeting a market niche is that specialist insurers don't have to cross-subsidise to keep overall prices down - a strategy commonly used by standard insurers. "Older people don't have to overpay for younger customers who are more likely to claim," he adds.

These claims make sense on paper – and the concept of rewarding older policyholders for their caution and experience is one many appreciate – but in practice does buying cover from a specialist insurer actually save you money in what is already a highly competitive market?

To test-drive this idea we asked comparison site GoCompare to crunch some numbers for us – by getting quotes for 65 and 80-year olds across home, motor and travel insurance.

Are specialist insurers cheaper?

Take car insurance, when we looked at quotes for a 65-year-old man driving a 2011 Ford Focus with five years' no claims bonus in Canterbury, the two cheapest quotes were from Sheilas' Wheels and Esure at £151.55 (they are part of the same company).  However, Rias was not far behind at £153.74.

You might expect a specialist's experience to really come to the fore with much older drivers, so we ran the search again for an 80-year old but disappointingly the specialists completely dropped off the radar. Esure and Sheila's Wheels were once again top of the pile, with the cheapest specialist deal coming in at a much more expensive £357.05 from Saga.

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For home insurance, with our married 65-year- old from Canterbury, living in a three-bed bungalow, three standard insurers (AXA, Swiftcover and AA) were all able to beat Saga on price, with the cheapest, AXA, charging £92.14, £10 less than the cheapest specialist. Once again, for our 80-year old, a specialist insurer didn't feature in our top five quotes. The cheapest insurer was Sainsbury's Bank, coming in at £97.15 – more than £10 less than Saga.

Quotes for travel insurance told a similar tale. The top five quotes from insurers including Flexicover, TopDog and Spectrum were all somewhere between £25 and £30 for two 65-year olds spending a week in Spain. Saga, the cheapest specialist, cost more than double, at £61.47. For 80-year-old holidaymakers, Saga was more competitive, charging £103.33, but was pipped by three different levels of cover offered by Explorer, ranging from £75 to £84.

Of course, these are very specific examples and if we used different criteria, the top quotes might not have been the same. Nonetheless they demonstrate that despite their specialist underwriting, there is no guarantee that an insurer that only targets 50 pluses will be cheaper than a general insurance company.

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Do specialist insurers offer better cover?

As anyone who has had to claim on an insurance policy will agree, the cheapest policy isn't necessarily the best one. So do specialist insurers offer cover that is better suited to the needs of an older clientele?

Both Rias and Saga boast that their home insurance provides cover if your home is unoccupied for 60 days, which can be useful if you enjoy longer than average holidays or have an extended stay in hospital.

But, according to research from GoCompare, while some policies will only provide cover for 30 days, more than half  (59%) of the policies on the market also provide cover for 60 days or more. Click 4 Quote Home Insurance has an unlimited occupancy period, Millenium Insurance offers 90 days on its Home Shield Plan, as does Saffron Insurance.

At first glance, Saga's travel insurance does look expensive compared to its rivals – the only real differentiator in our search was baggage cover of £2,500, compared to a standard £1,000 or £1,500. However, where Saga does stand apart is in its treatment of policyholders with pre-existing medical conditions.

Ramsden explains: "Insurers do often exclude medical conditions, so if you've had recent heart surgery, any claim linked to that wouldn't be covered. We price based on a medical declaration and then cover everything."

Saga's car insurance also offers another benefit that will appeal to older, less healthy drivers, which isn't replicated in the wider market, and that's the ability for anyone with a full driving licence to drive your car in a medical emergency.

Cost and benefits aside the specialists also claim they have some softer benefits that will appeal to older people. "We invest significant sums in making sure our home claims are being properly handled and we also have a higher appreciation of issues around bereavement," explains Ramsden.  

He also claims Saga goes the extra mile in making it easy for policyholders to communicate with the insurer. "All our contact centres are in the UK and there are no push-button systems on our phones – so you speak to a real person straightaway."

Whether your priority is price, cover or service it may make sense to buy your insurance from a specialist, but do your research first. Don't just fall for the marketing spiel and assume that just because a company specialises in the over 50s it will automatically give you a better deal. In many cases it won't.

Whatever your age, the rules for buying insurance are the same. Always shop around, compare price, and make sure you know exactly what you are getting in terms of cover before you make up your mind.