From 21st December 2012 (known here as G-day), changes to the EU Gender Directive will mean insurance premiums of all types will equalise between men and women. The current sophisticated system of premiums being assessed based on decades of data regarding mortality, morbidity and claims rates will largely disappear.
It may seem to some to be completely potty but it is coming and there is little we can do about it. From G-day insurers will no longer be able to offer gender specific rates. Although there are some details to be ironed out, a leading financial protection insurer expects the following price changes post G-day:-
| Insurance | Male | Female |
| Life Cover | -10% | +20% |
| Income Protection | +25% | -30% |
| Critical Illness | -5% | +10% |
The legislation will also affect pension annuity rates, as men for example, due to their lower life expectancy, currently receive more income per £ than women. This will result in increased annuities for women and conversely a reduction in rates for men.
There will be no transitional arrangements for pipeline business introduced to insurers before G-day. Business must be completed by midnight on the 20th December 2012 for the prevailing rates to apply.
What to do?
If you are thinking of effecting insurance or purchasing an annuity speak to a financial adviser urgently. Insurance can sometimes take many months to underwrite so commencing the process early may pay dividends.
The financial services industry is sometimes accused of using sales messages such as ‘Buy now while stocks last’ but surely this is one occasion when it is genuinely merited.
For further information please do not hesitate to contact Jeff Crewdson.