/ Money

Are products aimed at the over-50s delivering poor value?

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.

Our investigation looked at over-50s life insurance plans, equity release schemes and funeral plans, as well as specialist car/home insurance providers and savings accounts.

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?

Comments
Member

Services for the over-50s are only available to people in that age group but it does not mean that they offer best value for money. I currently have motor insurance with RIAS.

Member

“Axa Sunlife uses chat show presenter Michael Parkinson”. This is so insincere we turn the sound off until the drivel is over (not the norm for us!).

Companies use targetting of different sectors routinely to simply sell product. The over 50’s are not special in this respect. I regret I distrust marketing people – they are in the business of telling half-truths or worse to help deceive us – and I also distrust marketing academics who are in the business of developing deceitful techniques to help organisations part us from our cash. But – we choose what to spend our money on so are usually the only ones to blame.

Politicians are a prime example of this. I wonder what they will offer the over 50s in the run up to the election?

Member

I can’t stand the way companies patronise us to lure us into products and services. I think it’s a bit rich getting a “One Foot in the Grave” star to promote life assurance! And perhaps some people are enticed by Grandad Parky on the box – it must be effective advertising [he looks so much younger]. I suppose I wouldn’t take financial advice from somebody who needed to resort to doing daytime TV adverts for a living.

Having got that off my chest, I think the marketing of financial products does play on the fears and anxieties of the older generation who perhaps have a limited chance to boost their pensions, get hold of some capital to improve their living conditions, make good previous income shortfalls, and save their relatives from financial difficulty on their death. Of course, these promotions probably go over the heads of most of the target generation as they are aimed at the better-off who have some disposable income or assets they can surrender. And sometimes the better-off seem to jump first and look later – the detestable marketing gurus know that so they believe it’s worth throwing them a sprat like an M&S voucher and then reel them in like a mackerel. It’s all actuarially-based, of course – to the company’s advantage. Further proof that pensioners are rolling in it [stand by for an explosion from Michael] comes today with news that millions of them rose at c**k crow and stamped their feet on over £1bn worth of pensioner bonds that were suddenly released into the wind. Good luck to you all – it’s a cracker. But you can see why the insurance market in all its canny guises from equity release [cash-in your asset] to funeral plans [death deposits] wants a slice of the cake and will play games to get it. Presumably the marketing attack on senior wealth will go up another gear when we are allowed to prise the lids off our pension pots and scoop out a portion for immediate use.

Member

I hadn’t bargained for the profanity filter. Please insert “ock-“.

Member
renniemac says:
17 January 2015

I agree with you John it is obscene these previous TV (personalities) hate that word. come on to our screens and try to part us with our hard earned cash. it makes me angry that some wee pensioner out there maybe liked the likes of Parkinson and co so foolishly trust they are being sincere. waffle!.
It’s like Ranson telling people how to get compensation, this is someone who used to name and shame the baddies in the 70s/80s, now they are assisting the baddies. there should be some sort of governance to protect people from the likes of these.
but the government isn’t going to do anything these idiots are opening the door to allow people to foolishly plunder their pensions with live today worry later ethos. they don’t care they will have your tax and vat for all the “Lamborghinis” we are going to buy.
I always laugh at these adverts, pay such and such in the first year, but what about the preceding years, how much will I pay. oh! yes and you wont get back what you put in. etc., etc. etc….. blah, blah, blah.!
the lot of them should be outlawed.
shame on them all.

Member

It seems to me that unless these “personalies” are actually satisfied regular users of the product they promote they should be prosecuted, along with the advertising agency and the product supplier, for misrepresentation.For example M Parkinson for life insurance, G Lineker for crisps, C Vorderman for loans, M Pierre White for stock pots. The trouble is, many people no doubt see their advice as wise, and the personality perhaps as a role model. What a delusion. I’d stop short of the death penalty though.

Member

I can’t see the government or the advertising watchdog doing anything to stop this kind of promotion. The only hope, which people have mentioned many times before on this site, is to improve people’s knowledge and understanding of financial products and their implications, especially theose with long-term consequences. Unfortunately there are relatively few affordable sources of competent and authorised financial advice. Not everyone who has been easily parted from their money is a fool – they might have been manipulated, or led into temptation.

Member

Rather than looking at marketing of products for the over-50s is it not time we should be putting an end to misrepresentation in marketing.

The Advertising Standards Authority investigates complaints about advertising and publishes details of the rulings. What we need is for advertising to be inspected before it appears and for ASA to be much tougher than it is at present.