Unfortunately, or fortunately, depending on your point of view, not all insurance policies are equal. Especially when it comes to pricing. There can be huge variations in the amount paid by customers who enjoy the same levels of cover simply because of where they live or how old they may be. However, this disparity is far from accidental.
Insurance providers have to use a number of factors when determining how much a policy will cost. All of these are individual to each person and are used to determine the potential cost and likelihood of a payout. Essentially, it is a risk assessment; employing numerous metrics, which are fed into an algorithm and finally produce a quote for the customer. And age is one of the factors used in this calculation process, because insurers use it as a guide as to how likely you are to make a claim.
Age definitely has its advantages
Again, this might seem slightly out of kilter with what you might expect. After all, you could be burgled or crash your car at any time. However, insurance companies rely on a vast range of data sources to accurately calculate which people are more likely to make a claim.
For instance, when it comes to car insurance, those aged between 17 and 20 pay a higher insurance premium to those over 50 because they are more likely to make a claim (Source: This is Money, 2012). It isn’t just the likelihood of a claim but also the average payout involved. Again, young male drivers pose, statistically at least, a high risk to insurers (Source: The Metro, 2012) and this is reflected in their policy prices.
Therefore, you have your peers to thank or to blame for the cost of your insurance policy. The issue of age is so prevalent within the industry that there are a number of companies that now offer cover for specific people. By catering for a particular group in society, these insurers are often able to offer a more tailored service and better pricing for their customers too.
More choice, more competition, more savings
This diversity gives you much more choice when it comes to buying insurance while helping to improve the overall competition within the industry. However, regardless of who you use, the same rules and cost permutations apply. Consequently, again taking the example of car insurance, a like-for-like quote for somebody who is over 50 is likely to be far less than somebody under the age of 30, figures that are backed up by the Office of National Statistics (ONS) (Source: This is Money, 2012) In some instances then, we can see that age is rewarded with lower premiums.
By the time you’ve reached 50, generally, most people have matured as have their no claims bonuses. Having built up trust over the years, your risk rating will decline markedly. As previously mentioned though, this doesn’t mean that over 50s are exempt from claims entirely; however, you do have statistics on your side.
Help yourself whatever your age
Whilst this is one of the perks of the ageing process for you, it can be frustrating for younger homeowners and drivers who are legally obliged to purchase a policy each year. However, there are a number of ways that everybody can lower costs, such as parking your car in a locked garage overnight or adding an alarm system to your home. Essentially, anything that lowers your risk in the eyes of the insurance company is generally going to be a good thing.
So even if you are under 50, there are plenty of ways in which you can reduce the amount you spend each year on insurance. But, if you’re a half-centurion you already have a natural advantage over most, thanks to your age and experience. This can benefit the cost of your car and home insurance along with a whole host of other policies.
*Note: Insure4Retirement has issued this guide for information purposes only regarding what could be available on a home insurance product. No advice is being offered as to the suitability of any policy to a person’s own personal circumstances.