We’ve just carried out some new research looking at five product areas for older adult finance. The results suggest these products don’t always live up to the marketing claims.
We found over-50s plans that offer poor value when compared to standard whole-of-life insurance. They required nearly twice the monthly premiums for the same pay-out. We found funeral plans with low benefit limits and high cancellation charges. There were also equity release schemes with interest rates that are sometimes nearly 8%, much higher than standard mortgage rates for 10-year deals at around 4%.
On insurance, we discovered that specialist car and home insurance for over-50s (from the likes of Saga, Rias, Age UK and Castle Cover) was often more costly when compared to standard insurance. For example, in our scenarios, specialist policies for over-50s cost up to £1,075 more each year than the cheapest car insurance we found. When we looked at home insurance, the difference was £364. Some age–restricted savings accounts have interest rates as low as 0.05% or 0.1%.
Marketing of older adult finance
In an effort to get your custom, some companies offer incentives, such as gifts or vouchers. Or they use well-known TV personalities in their advertising.
This is particularly the case in the over-50s plan market, where Axa Sunlife uses chat show presenter Michael Parkinson and former One Foot in the Grave actress Annette Crosbie in TV and print advertising to promote its product.
A marketing expert from Warwick University told us:
‘If there is a crowded market with many suppliers, people may choose a company based on one attribute, ie perception of knowing people like me. Over-50s specialists will stand out, even if their abilities are no different to other companies.’
We all like to feel ‘special’ or ‘wanted’, but are these companies failing to always give us the best option?
Have you had experience of using these products or providers? The best advice is to trawl the whole market, and consider all options. Is it too easy to assume that specialist companies have your best interests at heart?