Beware financial products targeted at the over-50s

Bank accounts and insurance deals for older people are not necessarily the best.

An ever-growing number of financial products targeted at the over-50s have been launched on to the market over the past couple of years. From insurance to savings plans to share-trading accounts, there are now dozens of companies with products available exclusively for older clientele. But do they actually offer any better value than the rest of the market?

Alas, the answer is often no. Such products are regularly launched by companies looking to cherry pick the most profitable customers for their books – and while some do indeed offer a better deal than might be available in the wider market, there are plenty which do not.

For example, Abbey's recent 50+ three-year fixed-rate bond pays a rate of 5.7 per cent – not bad, but well below the market-leading 6.5 per cent available on a similar product offered by Icesave (which has no age restrictions). Furthermore, Abbey's 50+ bond is identical to another three-year bond that it offers, which pays exactly the same rate. So why bother calling the same product something different – and placing age restrictions on it?

Paul Green of Saga says: "Once older people have found a savings plan they like, they tend to stick with it."

This is why the over-50s market is so valuable. While younger savers are more likely to be rate tarts – swapping their savings from account to account in search of the best rates, older savers typically prefer to keep their money in the same place for longer. Hence, it's well worth banks and building societies putting in a little extra effort to signing them up.

When it comes to insurance, the story is similar. Specialist car insurers for older people such as Saga, or specialist brokers such as Rias, will not necessarily get customers a lower rate than they would have found by spending some time shopping on confused.com, gocompare.com, or any other financial comparison site for that matter.

Janet Connor, the managing director of Rias, says that while her company cannot guarantee it will find the cheapest rates, it may well do. "Drivers over 50 have lower levels of claims, so we're able to work with insurers to find keener prices for them," she says. "We're very committed to keeping prices at the sharp end.

"It would be unfair to say that in every case customers would do better with us than an aggregator [price-comparison site], but in many cases, we'll quote a very good price."

Green adds that Saga tailors products to customers' needs, and focuses on customer service – two qualities which he says are often a priority for the over-50s.

"When it comes to buying travel insurance, it's particularly important not to just buy on price," he says. "We're happy to insure for pre-existing medical conditions, as long as we understand them. For example, if you've got a heart condition, you don't want a policy that says it won't pay out if you have a heart attack."

If your insurance needs are complex, or you're finding that you're being turned down elsewhere, specialist financial services companies for the elderly can indeed prove a lifeline. But given the growing number of specialists, it's still worth shopping around to check you're getting the best deal. As well as Saga and Rias, it's worth checking out products from Intune, the recently launched financial subsidiary of Help the Aged and Age Concern.

If your needs are more simple, and there's no reason that you would struggle to get insured, or find the right savings account elsewhere, make sure you do a full sweep of the market – including non-age restricted products – before you make your decision.

"Across the board, the over-50s products are pretty much the same as any other financial products," says Mike Naylor of the comparison site Uswitch.com. "You still need to choose very carefully, look at the terms and conditions and remember that just because you're eligible, it doesn't mean you're getting the best value."

Naylor cites the example of Alliance & Leicester's recently launched packaged current account for the over-50s. It costs £10 a month, but pays 7 per cent interest on credit up to £2,500 for the first year – and also includes worldwide travel insurance, some additional health insurance benefits, as well as a handful of other bells and whistles. Although Naylor concedes it could represent good value for some consumers, he points out that it's important customers calculate the actual value of the extras, and check that they really are saving money.

In a similar way, it's important not to be seduced by free gifts when buying financial products. The Post Office recently launched a new life-insurance product for the over-50s, offering new customers a freeview box, digital camera, or a box of wine. But if your premiums end up significantly higher than you could have got elsewhere, or you find yourself landed with a policy which is unsuitable for your needs, the value of the gift will be nothing next to how much you could lose out by.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

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