Insurance
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26.10.2012
Gender Neutral Life and Income protection comes in on 21st December 2012
Gender Neutral Life Assurance Pricing
How premiums are set on new insurance plans will change significantly by the end of 2012. Last year, the European Court of Justice banned the use of gender when determining new premiums and means that millions of individuals will pay considerably more for new life assurance plans.
Which plans could be affected?
Gender tends to influence the prices paid under the following types of insurance, although general insurance, such as car and home cover, could also be affected.
• Life Assurance/Critical Illness
Men currently tend to pay more than women because on average women live longer, so claims are paid later.
The ruling will lead to higher premiums on new plans, although the biggest increases will be seen by women.
• Health Insurance – Income Protection
Women already tend to pay more than men because they are more likely to visit their doctor when feeling ill, increasing the chances of a claim, and are more likely to suffer from certain chronic diseases. The biggest price increases in the cost of new plans will, therefore, be seen by men; indeed some women may see a fall in the cost of cover.
• Annuities (fixed income for life)
Men currently tend to receive higher levels of income because on average they live for a shorter time, so insurers won’t have to pay out for as long. Annuity rates on new plans, and hence income levels, are likely to fall for men.
The simple fact is that insurance pricing is about risk; a number of factors are taken into account and these factors are different for men and women. The inability to allow for gender will not necessarily make pricing fairer, but an equally simple fact is that when the ban comes into effect at the end of 2012 it is likely to increase prices for new life cover, critical illness and income protections plans, as well as reduce income from new annuities.
Contact John Ward on 01619808006 or e-mail [email protected] to understand how Gender Neutral Pricing could affect you.
PROTECTION
John Ward Personal & Corporate Wealth Management represents only St. James’s Place Wealth Management plc (which is authroised and regulated by the Financial Services Authority) for the purpose of advising solely on the Group’s wealth management products and services, more details of which are set out on the Group’s website www.sjp.co.uk/products.
Posted On 2012-09-20 13:59:21
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