Tackling Insurance Issues For Older People

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From car insurance to travel insurance, and everything in between, insurance products are often an unwanted yet necessary expense. Unfortunately, this is more true for the elderly than practically any other demographic. In some cases, the elderly will be the group that require the most assistance from their chosen provider, and yet securing insurance is often difficult – and sometimes even completely impossible – due to high costs that often appear to increase based on age alone.

Of course, if we require insurance, we can always find it, but for the elderly there doesn’t seem to be a happy ‘middle ground’. All too frequently, there are only two choices. Firstly, we could pay high amounts to ensure we’re protected should the worst happen. Secondly, we could arrange low cost insurance through a company that has a poor reputation. But as with anything, we want quality. If we’re looking for mobility equipment, we’d want a high quality stairlift. If we were looking for help in the home, we’d want a good carer. So why should we settle for anything less when it comes to insurance?

Why Are Premiums so Expensive?

At its most basic level, the reason why insurance premiums are so high for the elderly is simply because data suggests that the elderly pose more of a risk, and are more likely to make a claim. However, the details of this vary depending on the type of insurance in question. Here’s a rundown of three different types of insurance, showing why the elderly pay more, and how you can successfully minimise costs:

Travel Insurance

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A report by Which? shows that while the average 65 year old traveller pays £126 on average for an annual travel insurance policy, a 75 year old will pay £306, and an 85 year old will pay more than £600. Why? There are two sizeable factors affecting travel insurance quotations. Firstly, older people are ‘more susceptible to disease and disability’, according to the World Health Organisation, which means they’re more likely to fall ill while travelling abroad than a healthy tourist in their 20’s. Secondly, an older person may be more likely to suffer a bereavement, which could cause the trip to be cancelled.

When looking at statistics which have been published by the Association of British Insurers (ABI), it’s not difficult to see why insurance companies charge so much for older travellers. According to the ABI, a 65 year old is twice as likely as a 30 year old to make a claim on their travel insurance. The average cost of a claim is around 3 times higher for a 90 year old than a 30 year old , and about 10 times more than the premium. And let’s not forget that older travellers are some of the most adventurous, too, with the over 55’s more likely to head off on an exhilarating touring holiday than their younger counterparts!

So what are the best ways for older people to save on their travel insurance? It’s important not to conceal any existing medical conditions, or lie to get cheaper insurance. This will render your policy invalid, meaning that should you encounter trouble abroad, you will be ineligible for help from your insurance company. Instead, look for specialist insurers who cover a range of medical conditions as standard. You may also wish to take out a multi-trip policy if planning to travel regularly, as these can save money. Alternatively, you could customise your plan to remove extras that you don’t require, such as winter sports cover.

Car Insurance

It is reported that elderly people fear a loss of independence more than they fear death, and as a result more and more of them are choosing to continue driving in later life to maintain a sense of freedom. Unfortunately, this freedom may come with a sky high price tag. Further data from the ABI shows that while a 66 year old will pay a premium of around £241 on average, an 86 year old will be paying £415 for the same policy. It is only the 18-20 age group which pays more for their car insurance than the elderly, with an average premium of just under £1000, and an average claim of £3667.

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What’s interesting is that, unlike travel insurance where there is naturally an increased risk (and solid statistics demonstrating that, on average, older people do make more claims), it’s not quite as simple to understand why car insurance for older people is so high. The Institute of Advanced Motorists claims that not only do older people have more experience on the roads, but that they also adopt a safer driving style, reducing the risk of accidents. In fact, the 8% of drivers over 70 in the UK are responsible for 4 percent of accidents, while the 15% of young drivers are responsible for 34 percent of the total.

As with travel insurance, it’s important not to conceal information about your health to receive a more affordable quote. The Brake charity claims that, from age 25 onwards, the amount of brightness required to see properly doubles each and every decade, making eyesight a common issue for older drivers. Again, it’s worth looking into specialist insurers who are able to offer reduced rates for older people, or considering ‘black box’ insurers who amend your premiums based on your driving style. Perhaps most importantly, don’t add young grandchildren to your policy. Your premiums will rocket!

Home Insurance

When it comes to home insurance, things are different. Home insurance is focused exclusively on the contents of your house, and the benefits of any security measures you may have in place, such as a burglar alarm for example – age doesn’t come into it. Should an elderly person die, and a 20-something grandchild subsequently moves in and continues living in the property with the same contents as before, the cost of the policy should not, in theory, change at all. And yet despite this, the elderly being ‘ripped off’ on their home insurance is still a story that frequently pops up in the news. So just why are we paying more for our insurance?

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Unfortunately, certain aspects of home insurance are causing it to have a very poor reputation in the media. On the surface, it’s actually very easy for the elderly to secure home insurance, and there are a number of companies that elderly people feel familiar with and comfortable with that offer easily accessible policies. However, as the Guardian puts it, ‘home insurance is the most unethically sold financial product in the country’. Why? Because these insurers are seemingly taking advantage of their elderly customers, charging exorbitant rates they think won’t be questioned.

After all, as we’ve seen from other types of insurance, it’s ‘normal’ for the elderly to pay more, so why shouldn’t we expect to pay more for our home insurance? Within the last few years, there have been at least two big name brands that have come under fire for taking advantage of the elderly by offering premiums of £1000 or more, when a similar policy could be secured from another insurance firm for £200 or £300. Saga was one of them. ‘Saga is a brand name associated with older people, and people feel it can be trusted, but they’re taking advantage’, says Dot Gibson of the National Pensioners Convention.

The Future of Insurance for Older People

The good news is that the state of insurance for older people in the UK simply can’t be maintained. Why? Because it won’t be long before we’re a nation of older people – we’re living longer than ever before. Consider than in 1948, nearly half of us died before reaching retirement. Today, however, we’ve got an average life expectancy of 79 years. We’re also having fewer children. No longer is 2.4 children the national average – instead, families have gradually been becoming smaller since the 1980s, with an average today of just 1.9 children. Quite simply, insurers’ target audiences are diminishing, which will eventually force them to extend their services to new demographics – the elderly in particular.

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This may seem like a disadvantage from an insurer’s perspective, but it could actually bring huge benefits. As it stands, the elderly demographic is a pot of gold waiting to be claimed. We’re a demographic demanding financial products, and yet struggling to find a supplier. Travel insurance among those aged 75 to 87 has grown by 40 percent in the last few years alone, while there are more than 4 million drivers over the age of 70 today. We’re an untapped resource, and the sooner insurers realise that the better.

Article contributed by Harold H. Rigby, health and lifestyle writer.