Beware financial products targeted at the over-50s
Bank accounts and insurance deals for older people are not necessarily the best.
Saturday 17 November 2007
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
- 1 James Foley 'beheaded': Isis video shows militant with British accent 'execute US journalist' – and warns Obama of more to come
- 2 ALS ice bucket challenge co-founder Corey Griffin drowns aged 27
- 3 Cilla Black defends Cliff Richard: 'I am positive that the allegations are without foundation'
- 4 Nicki Minaj finally releases predictable 'Anaconda' video
- 5 James Foley 'beheading': Met police warn public watching murder video could be criminal offence
Scottish independence: English people overwhelmingly want Scotland to stay in the UK
Isis threat: Cameron wants an alliance with Iran
Crisis? What crisis? A visiting US doctor gives the NHS a rave review
Michael Brown shooting: Chaos erupts on the streets of Ferguson after autopsy shows teenager was shot six times – twice in the head
Richard Dawkins on babies with Down Syndrome: 'Abort it and try again. It would be immoral to bring it into the world'
Scottish Independence Referendum: Salmond described as 'arrogant, ambitious and dishonest' by Scottish women
iJobs Money & Business
£45000 per annum: Harrington Starr: Quantitative Analyst (Financial Services, ...
Negotiable: Harrington Starr: Application Support Engineer (C++, .NET, VB, Per...
£450 - £600 per day: Harrington Starr: AIFMD Business Analyst / Consultant - I...
£450 - £600 per day: Harrington Starr: Business Analyst Solvency II SME (Pilla...
Day In a Page
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony