Over-50s are at risk of being ripped-off by specialist financial products aimed at older people, according to Which?
The consumer group analysed 55 specialist financial products from the likes of Saga, RIAS, Age UK and Castle Cover. It looked at life insurance, equity release, funeral plans, car insurance, home insurance and savings accounts and found that some offered terrible value compared to their standard equivalents.
The overarching concern is that marketing ploys like free gifts and celebrity endorsements may be tricking older people into taking poor deals.
Which found that some over-50s plans require twice the monthly premiums for the same payout that you could get with a normal whole-of-life policy.
Over-50s plans work a little like normal life insurance policies, in that you pay a monthly premium and when you die your loved ones get a payout. The problem with over-50 plans is that the payout when you die is capped, but the amount you pay in isn't. So if you live longer than expected, you may pay in far more than you get out.
On the plus side, you don't need a medical examination so you can get a policy even if you're not in perfect health.
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Funeral plans can be a useful way to put your loved ones' minds at ease when it comes to paying for your funeral. You take the burden of planning and paying for your funeral away from your loved ones, and can pay for it over a longer period.
However, Which found that many schemes had costly catches, such as limits on cremation/burial costs and high cancellation fees. It suggested that putting your money into a savings account may actually leave your loved ones in a better position.
Specialist car insurance is often more expensive too, despite older drivers having more experience behind the wheel. It can cost up to £1,075 more per year than those taking out a standard policy!
Some insurers have upper age limits for new customers, so will not cover older drives. If you do exceed the upper age limit, insurers should signpost you to someone who will cover you under the Equality Act.
It's best to take a look around price comparison sites like lovemoney.com for three or four good deals that you're eligible for, and be as accurate as possible when estimating your mileage. This will hopefully get you a cheaper deal.
Adding a second named driver who lives at the same address could help bring costs down.
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The difference is a less severe £364 between an over-50 and standard home insurance policy, according to Which's research.
If you want to get the best possible deal, make sure you have an accurate estimate of both the valuables in your house and the rebuild value, if necessary. It's best to avoid underestimating the value of your home contents - the last thing you want to do is under-insure yourself.
As over 50s tend to make fewer, smaller claims than younger people, insurers may give offer a cheaper rate. Just watch out for marketing gimmicks.
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As for savings, some age-restricted accounts have interest rates as low as 0.05% (from Progressive Building Society's Premium Return account) or 0.1% (from Danske Bank's Midas Gold account). Even in the current market, you can do far better than that.
Don't leave your savings rotting in a naff savings account. Keep an eye on what rate of interest you're getting, and if it's not up to scratch, switch.
You can keep up to date on the best savings accounts in Where to earn most interest on your cash.
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