Targeting the silver savers
Older people have long been ignored when it comes to savings, insurance and other products. Insurers especially have fought tooth and nail for the custom of younger age groups, but until recently they typically blacklisted people over 60 or 70, or ramped premiums up so much that they were unaffordable. Even now, 90% of travel insurance policies have a maximum age limit, with a third of all policies refusing cover to over-65s.
But such companies are neglecting a growing and increasingly influential section of society. It's estimated that about a third of the UK population is now 50 or over - a figure forecast to reach two-fifths within 25 years - and over-60s already outnumber those aged 14 or less.
Clearly, this is an age group with serious spending power, particularly as its income has risen faster than average earnings since the late nineties. Financial researcher Defaqto reckons over-50s have a combined wealth of £560 billion and a spending power of around £175 billion.
At the same time, however, it's a generation that needs more financial support - around 20% of pensioners live in poverty and a quarter of over-50s don't think they will be financially secure when they get older, says Age Concern.
Just because a product is branded for older generations, doesn't necessarily mean it's the best deal. Some companies take advantage of the perception that older age groups will respond better to a targeted pitch, while there's also a notion that over-50s are less in tune with how products work and more likely to be loyal to a company if they believe it's got their best interests at heart. So is there any truth in this?
Obviously, there will be exceptions, but many people who have banked with a particular institution for most of their life will trust them implicitly. On the plus side, targeted products often emphasise service, particularly branch-based assistance and phone help from real people as opposed to automated voices.
About 36 providers offer 64 variable rate products for over-50s, with a range of terms, minimum and maximum deposits, rates and notice periods reflecting the wider savings market. Most are limited to those over-50, although there are several that have a minimum age of 55 or 60. But while these accounts are designed for certain age groups, they don't have any additional features that make them particularly relevant to the needs of older people.
There are some high minimum investment levels, however, with a number requiring at least £5,000 deposit, and a smaller proportion than in the wider savings market available to those with less than £1,000 to invest.
Like all savings accounts, restrictions are common, more so on the highest-paying offers. To find out the best saving products for the over-50s, check out Moneywise's daily guide to saving accounts.
Although retired people spend more on longer holidays than younger people, travel insurers have long excluded over-60s, with around a fifth of over-65s still unable to get travel insurance quotes.
Intune's new policy is one of several policies without an upper age limit - Saga and Age Concern are among the others. Where upper limits are applied, they vary significantly between providers. Direct Line covers people up to 106, the AA up to 79 and Rias up to 99 on single trips. But the cost can increase dramatically with age and premiums typically double at age 65 and again at 70.
According to industry research, for a 33-year-old male the best annual worldwide multi-trip cover is £32.50, while a 66-year-old male faces a premium of £46, and a 76-year-old would have to fork out £139.
It's a similar story if you're over 70 and looking for motor insurance. The best buy car insurance deals for over-65s are dominated by mainstream policies.
Many insurers won't accept new customers over a certain age, with the exception of the specialist insurers that don't have upper limits. The good news is that this is improving, with insurance giant Groupama now offering a specialist over-50s policy, Wiser Choice, while there are plenty of non-specialist policies with decent rates for older drivers.
The Association of British Insurers argues that motor insurance premiums should remain higher for older age groups, citing research suggesting drivers in their 70s are over 70% more likely to be killed or seriously injured than those in their 60s. Home and contents insurance is less of a problem, but there are still some policies aimed at older people from the usual specialists - Saga, Intune, Rias and Age Concern.
Normal policies may not provide cover where the house is left empty for more than two or three weeks, for example. Retired people tend to take longer breaks away from the home, and Rias and Intune offer cover for up to 60 days.
Unsurprisingly, health-based insurance can be more complicated for over-50s. Most insurers offer term assurance up to age 85, and the likes of Norwich Union and Legal & General are popular.
Over the last few years, energy bills have become an increasing source of stress for older people. If you live on a pension, increases in electricity and gas bills can significantly outstrip your income.
Powergen is the only provider with tariffs aimed at the elderly. One initiative, Staywarm, is open to over-60s in houses with three bedrooms or less and allows users to pay a set monthly amount for both gas and electricity, according to the number of people and rooms in the house. Users pay the same, regardless of how much they use, and contracts are reviewed annually, based on usage.
Powergen also offers an Age Concern tariff for elderly customers. This offers extras, including a 24-hour phone line and carbon monoxide detectors, but the average tariff tends to be higher than typical Powergen rates. Currently, medium users paying by direct debit pay an average of £857 a year, while equivalent Age Concern tariffs are £867.
The best way to get the cheapest energy is to opt for dual fuel rates with an online plan and pay monthly by direct debit.
The Consumer Credit Counselling Service says that over-50s now have the biggest outstanding card debts of any age group. Despite this, few cards have been targeted at over-50s - although you can bet that will change. Even so, providers will have difficulty breaking into the credit card market as it is very competitive.
The only credit card provider to currently offer cards specifically for older age groups is Saga. However, its rates tend not to be that competitive compared with other deals on the market for all age groups.
On the plus side, the card doesn't have any extra currency charges in Europe and just 1% worldwide - credit cards usually have a foreign usage loading of up to 2.75%.
So if you're over 50 or 60, buying a product or service just because it's targeted at you is rarely the best option. There seems little point in going for the age-restricted savings account deals, and it's only worth considering in some areas of insurance. Motor and travel insurance are the areas where you're most likely to benefit from taking a close look at specialist offerings.
Term assurance provides cover for a fixed term with the sum assured payable only on death. Term assurance premiums are based primarily on the age and health of the life assured, the sum assured and the policy term. The older the life assured or the longer the policy term, the higher the premium will generally be. There are generally two types of term assurance. Level term assurance premiums are fixed for the duration of the insurance term and a payment will only be made if a death occurs during the insurance period and with decreasing term assurance, life cover decreases during the insurance term reducing the cash payout the longer the term runs and this is reflected in the premium.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.
Generally thought of as being interchangeable with insurance but isn’t. Assurance is cover for events that WILL happen but at an unspecified point in the future (such as retirement and death) and insurance covers events that MAY happen (such as fire, theft and accidents). Therefore you buy life assurance (you will die, but don’t know when) and car insurance (you may have an accident). Assurance policies are for a fixed term, with a fixed payout, and unlike life insurance have an investment aspect: as a life assurance policy increases in value, the bonuses attached to it build up. If you die during the fixed term, the policy pays out the sum assured. However, if you survive to the end of the policy, you then get the annual bonuses plus a terminal bonus.
Association of British Insurers
Established in 1985, the ABI is the trade body for UK insurance companies. It has more than 400 member companies that provide around 90% of domestic insurance services sold in the UK. The ABI speaks out on issues of common interest and acts as an advocate for high standards of customer service in the insurance industry. The ABI is funded by the subscriptions of member companies.
Does exactly what it says on the tin: covers the contents of your home for theft and damage and also may insure certain possessions (jewellery, cycles) outside of the home. Things to watch for include the excess and also the maximum payout on individual items. Another grey area is kitchen fittings, as some contents policies say these are not contents but part of the fabric of the property and covered by buildings insurance and some buildings policies don’t cover them because they regard them as contents.