Despite pensioners , or those older than 55, having distinctly different risk profiles, asset classes and lifestyle requirements they are often not catered for by standard insurance products or other financial services.
Instead, pensioners are often grouped with and treated the same as their younger, higher risk, counterparts who they are often required to cross-subsidise.
The 55 plus age group is also distinct as many have spent a lifetime accumulating valuable possessions, “including art, rare coins, antiques or expensive cars” says Ilona Hilditch, Executive: Marketing and Advertising at Alexander Forbes Insurance.
It is extremely important to take these differences in to account when structuring cover for pensioners.
For example, “retail or replacement value is more important for pensioners when it comes to car cover as they do not draw a salary and cannot make up the difference in the event” explains Hilditch. Similarly, no excess policies are equally as important when people are no longer drawing a monthly salary.
Stamps, coins, jewelry, antiques, artworks and other heirlooms also need to be professionally evaluated and covered if they are to be replaced in full in the event of loss.
“In our experience we’ve found that risk profiles, asset sets and lifestyle concerns tend to change around the age of 55” says Hilditch. As such, it makes sense that people 55 and older require different financial products to meet their changing risk and financial needs.
Since the data shows that older people are more responsible than younger, they offer a lower risk profile. For example, when it comes to vehicle insurance, “it is generally accepted that older people take fewer risks on the road than younger people, with females in particular being involved in fewer accidents than men” says Hilditch. As such, premiums for those 55 and older can be scaled to acknowledge this.
Also, people 55 and over generally take better care of their possessions and, as such, can be rewarded for this by a premium discount, “especially if the house has a linked alarm system , burglar bars, electric fencing or is in a high security complex” adds Hilditch.
Comprehensive all risks policy, rather than a specific perils policy, is also important to this set. This would cover accidental damage to buildings, including lightning striking or hail as well as any loss or damage that might occur to possessions when away from home. This is of great appeal to a population set that travel more frequently and for longer periods, “often, for example, visiting family and friends or staying in their children’s homes for extended periods” explains Hilditch.
Having a product that specifically caters for the needs of this group is important, “especially considering that most people will be retired for 20 or 30 years these days” adds Hilditch.
Given these longer retirement periods, as well as the need to continue to earn in retirement, Alexander Forbes’ 55 Plus admits all those 55 and over who are not in permanent employ. This means that the many pensioners who continue to sell their skills as occasional consultants or serve as a non-executive directors still qualify.