Gender Neutral Premiums for Life Insurance, Critical Illness and Income Protection - 21st December 2012
Article published on 22nd November 2012
What is the EU Gender Directive?
The European Court of Justice have made a ruling that will mean the prices for most personal insurance products in the UK will become 'Gender Neutral' as of 21st December 2012.
What does this Mean?
For consumers the premiums payable on products such as Life Insurance, Critical Illness Insurance, Income Protection, Private Medical Insurance and Car Insurance will be quoted at the same price for both male and female lives. The directive officially comes into force on the 21st December 2012, which some in the industry have aptly named G-Day.
Will this Affect Me?
For policies like life insurance, critical illness cover and income protection that are currently in force, the pending gender repricing is unlikely to affect the premiums. The reason for this is that most existing policies will have either guaranteed or reviewable premiums, the latter only being revised upon a companys' claims experience.
The directive however will likely have a large impact on people taking out cover after the 21st December 2012. The impact will be a large premium increase for female applicants of Life Insurance, this has been estimated at around 30% 1. It is also unlikely that there will be any reduction in premiums for male clients.
For Income Protection plans the prices are likely to increase for male applicants as it is currently more expensive for female clients. It is predicted that female prices in this market may reduce slightly but it is safe to say that male prices will increase.
Critical Illness prices are still likely to increase for female lives but not as much as the life only plans.
What is I Minus E?
In March 2011 the chancellor created a new tax regime that will change the way Life Insurance companies are taxed on their profits. The 'I' represents the companies investments used to grow the life fund and the 'E' represents the expenses that can be deducted from the investments before tax is deducted. The proposal announced last year will also make Life Insurance policies and Life/Critical Illness Insurance policies in the the UK more expensive. Officially this comes into play in January 2013 however it is expected that most companies will just incorporate this at the same time as the Gender Directive on the 21st December 2012.
What Should I Do?
We are trying to get the message out to as many people as possible to get the insurance policies in place as soon as possible. Once you have Life cover and/or Critical Illness cover you will normally secure your premiums (as long as you opt for guaranteed rates). Due to the time it takes to underwrite cases, i.e. deciding on cover, submitting the applications and receiving any medical information required we recommend starting the process as soon as possible, rather than waiting until the last minute.1. Source: http://www.which.co.uk/money/insurance/guides/insurance-gender-discrimination-rules/gender-directive-and-protection-insurance/
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