Now we're all equal - and it will cost you more
On average women live longer than men. It’s one of the facts that virtually everyone knows and although advances in medicine mean that the life expectancy of men is increasing that fact still holds good today.
According to figures quoted by the BBC in September last year, life expectancy in the UK has reached its highest level. Men can now expect to live an average of 78.1 years – but still four behind women at 82.1 years.
That’s why women have always paid less for their protection policies than men. Simply put, their chance of dying young is lower. However, from December 21st this year all that is about to change thanks to European law.
On March 1st 2011 the European Court of Justice ruled that insurers will no longer be able to use a person’s sex as a factor in calculating the cost of their insurance. The ruling is known as The Gender Directive and comes into force four days before Christmas.
The first point to note is that it will apply to any type of policy that uses gender for any part of the cost or benefit calculations – so it will affect far more than just the cost of basic life cover. Critical illness cover, income replacement cover, health insurance and annuities will all be affected.
So will this mean that the cost of protection for men will fall to the lower rates paid by women? Sadly, no. The exact opposite is the case: insurers have confirmed that the Gender Directive will see across the board increases in the cost of protection policies.
Most insurance companies are saying that they will accept applications on their old rates up to December 20th but with factors like underwriting and possibly the Christmas post to take into account, it makes sense to act sooner rather than later.
Some clients will always dislike paying for protection, but it remains a key part of a complete financial planning package. No-one who’s claimed under a critical illness policy has ever said, “I still think the premiums were too high.” What’s really expensive is not having the cover when you need it – especially when it could be your family that has to pick up the bill.
At ASPL, making sure that your protection needs are taken care of is an integral part of our financial planning process – but you may like to take a specific look at your policies now if you think this change will affect you. This is perhaps particularly important for women, who have always been under-insured compared to men.
If you have been considering annuity purchase recently, then you should think about bringing it forward. If there have been any new additions to the family, the parents should consider setting up Life Assurance family protection plans sooner rather than later, before the cost increases.
The Gender Directive is going to affect many of us, so it may well make sense to discuss the implications with us before 21st December – just call if you have questions or would like to know more.
Although it’s not something we cover, you should note that the Gender Directive will also apply to your car insurance. Despite the fact that young men under 22 are up to ten times more likely to have an accident, Brussels are choosing to ignore that as it’s ‘discriminatory.’ You couldn’t make it up, could you?
Regular contact, valuations, knowledge of the market.Mr W - Gloucestershire