John Durant, a pensioner from Bristol, thought an annual policy could save him and his wife time and money. They go abroad often: he enjoys walking and cycling holidays in France and Spain, and his wife, a German-language enthusiast, likes spending time in Bavaria.
But when Mr Durant tried to buy an annual policy he found his custom was not welcome. Home & Overseas, the market leader, offers an individual annual policy for pounds 109, but it is not available over the age of 60. It pays up to pounds 3,000 for cancellation, and Thomas Cook's annual policy pays up to pounds 5,000 for cancellation or having to cut short a holiday.
Martin Mills of Home & Overseas said: 'Like young people who drive fast motor cars, elderly people are more of a risk. They are more likely to be incapacitated for longer if they have an accident and they are more likely to go down with an illness. And because they tend to have more time on their hands, there's a greater tendency to travel abroad and for longer periods.'
Barclays offers an individual annual policy for pounds 97.50 to people under the age of 71, but older people can buy only by individual arrangement. National & Provincial doubles its rates - from pounds 75 - for people over the age of 66. Abbey National doubles its premiums when policy-holders hit the age of 66. The bank says claim rates are twice as high among the elderly as among other customers.
Midland Bank offers its elderly customers one of the best deals. Firstdirect customers and holders of a Midland Bank credit card over the age of 65 can get an annual policy for pounds 123.75 - the usual pounds 99 plus a 25 per cent loading for age.
The main problem for the insurers is the US and Canada, where medical fees can easily hit six figures. Pensioners are no more likely than anyone else to lose baggage, but with daily hospital fees running at pounds 3,000 in the US, even a minor ailment can cost the insurers dear.
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