Just over one year ago the Chancellor of the Exchequer George Osborne announced that as of 6th April 2015 retirees would be able to choose between purchasing an annuity and receiving their pension payments on a regular basis or cashing out their entire pension in one lump sum. The case behind this decision was that pensioners should be given the freedom to decide how they want to receive their pensions and have the ability to use them to their full potential.
These days, a large amount of people save towards personal pensions in order to help them when they retire which means their state pensions are sometimes seen as an added bonus. Having an annuity may therefore not be as beneficial as a lump sum which can be used to pay off mortgages or invest in larger items.
In fact, as pensioners are now able to cash out their pensions it is expected for there to be an increase in “silver motorhomers” – retirees who choose to use their state pensions to purchase motorhomes and travel across the UK. According to a recent survey by the leisure holiday company Freedom to Go, 24% of the 1,000 over 55’s surveyed said that they are considering buying a recreational vehicle with their pensions.
As a motorhome insurance broker, this means it’s likely you will soon start to see an increase in leads from the over-55 demographic looking to make the most out of their hard earned pensions. However, while this may sound positive at first, the truth is that this new type of customer may require special care and attention.
When George Osborne first announced that retirees would be able to cash out their pensions there were concerns that this could lead to an increase in pensioners facing financial difficulties by failing to budget properly. As retirees have no regular income besides from their pensions, if they find themselves struggling it could have a massive impact on the economy as well as businesses such as insurance providers who as a consequence could experience an increase in missed payments.
As an insurance broker it is therefore your role to make sure that your customers understand their policies, the financial implications behind them and how they can remain safe. As you start to receive more leads from customers aged over 55 it may be wise to remind them best practices when it comes to their insurance and budgeting in general. For example, you could double-check with them that they are clear about certain underwriters’ cancellation policies and charges in case they can no longer afford their monthly repayments.
However, even though there are concerns that some retirees could spend their pensions unwisely the truth is that motorhomes are generally not impulse buys which means you will be dealing with a savvy bunch of customers. Furthermore, as they know that their money may have to stretch further they will likely do more research to make sure they are getting the best deal, which could mean having to make more of an effort to convert these leads.
In general, the role of an insurance broker is to partner qualified leads with underwriters who can provide high-quality cover and value for money. When it comes to retirees looking to use their pensions to travel the UK this can become slightly more complicated as while your customers will be looking for a good deal your insurance partners will be wanting to make sure that your leads do not pose a risk.
Communication is therefore key here and it is likely that there will be some back and forth between both your leads and your underwriters when it comes to arranging a policy. Unfortunately, as pensioners will soon have more money readily available to them it is expected for them to be increasingly targeted by scam artists, which is something you may also want to make them aware of.
On the face of it, having more over-55’s looking for motorhome insurance in the coming months sounds like a dream come true, however the fact of the matter is that the type of service you provide will need to be top notch if you want to secure conversions with customers that will be unlikely to default on their repayments.