Over-50s choice versus complexity

Some believe there is not enough choice. Neil McCarthy, sales and marketing director for Direct Life, says over 50s do not have as much choice as they could have given the demographic and lifestyle changes of recent years.

He says: “The 50-year-olds of today will be working longer, having mortgages for longer, will not be as well-prepared for their retirement, will be supporting children for longer and possibly maintaining the care needs of elderly relatives.

“Medical improvements mean the over 50s will be living for longer, surviving illnesses that may have reduced their life expectancy or affected their quality of life.

“They will require broader cover than basic income protection or private medical insurance, and as lives become more complex, the protection needs change over time.”

According to Mr McCarthy, most products do not carry sufficient flexibility to fulfil needs throughout one’s entire life, while post-retirement protection needs, he says, “particularly for early onset illnesses that result in the need for long-term-care, are not catered for”.

Others claim there is plenty of choice. Andy Nicholls, protection and mortgage adviser for Beaufort Asset Management, says there are many “innovative products and providers”.

Jennifer Gilchrist, head of proposition design at Royal London, agrees over-50s have “lots of choice”. In general, Royal London’s protection products can have an age range between 18 and 90 - so being over 50 does not restrict choice.

As lives become more complex, protection needs change over time Neil McCarthy

She explains: “The over-50s are seen as a key segment in the market and some providers have specific propositions targeted at these customers.

“There is a wide choice of cover, ranging from funeral expenses to inheritance tax planning. Accessibility varies from guaranteed acceptance, where medical history does not have to be disclosed, through to underwritten whole of life, where extensive medical history needs to be declared.”

However, with choice can come complexity, and this can be a barrier to many customers who are considering some form of cover later on in life.

This is the view of Dave Sutherland, managing director of Neilson Financial Services, who says there is “perhaps even too much choice - and this can cause confusion more than anything else.

“Product features can be complex and the benefits for customers are often unclear.”

He has called for more transparency, including ways to simplify the process and the proposition for over-50s life insurance, without adding half-way protections or complicated add-ons.

He points out this would be in the spirit of the Financial Conduct Authority (FCA)’s Thematic Review: Fair Treatment of Long-Standing Customers in the Life Insurance Sector.

In this paper, issued in March 2016, with a June 2016 end-of-consultation date, the FCA called on firms to commit to a fair outcome for customers.

It found a small minority of firms had not taken action when actual customer detriment was identified, and that many closed-book customers were not being given important information at key events.

The FCA also said communication could be “poor quality”, with some consumers not helped to understand “how their policy is performing or the level or impact of ongoing charges they are paying”.

The industry should also promote the value of policies, rather than simply engage on cost, says Mr Sutherland.

He adds: “So often, industry and customers focus on price and comparison sites without considering the true quality and value of the life insurance policy they are taking out.”

Indeed, as some of the experts FTAdviser spoke to pointed out, there are other routes to insurance for over-50s than cover specific to their age, or funeral care cover.

Many providers have re-entered the space in recent years to offer more options to the over-50s. Daryn Ingrey, marketing projects manager for Canada Life, says: “We re-entered the onshore individual term and critical illness markets in August 2015.

“Our onshore CanProtect products provide term assurance cover for individuals and couples between 18 and 85, and accelerated critical illness cover for those aged between 18 and 70 (plus their children).

“In a market which is being constantly challenged to grow, we believe this is a unique opportunity to reposition protection as a priority, rather than as a ‘luxury’ consumer purchase, for people of all ages.”