Will Sex really matter in 2013?
From 21 December 2012, your sex will really matter, in Financial Services at least, as new European gender laws mean that men and women will be treated the same when it comes to insurance premiums.
If you add this to tax changes in the New Year, most life insurance companies will be required to pay more tax, increasing costs and pushing up prices for customers, which means that generally for both men and women the cost of protection cover is set to go up.
What will happen after 21 December 2012?
It’s been a long time in the pipeline, in fact it’s nearly ten years, that UK Insurers have been battling with The European Court of Justice and unfortunately they lost the battle.
Some may say so what, let the massive insurance companies suffer, but in this case it will be you and I who will be affected, as a ruling in the European Court states that insurers can no longer consider whether you are a man or a woman when calculating the price of insurance premiums and any benefits and these changes will be implemented on 21 December 2012.
Which types of insurance policies will be affected?
Whilst also affecting car insurance and retirement annuities, the gender law will have significant repercussions for life, critical illness and income protection cover.
Will my insurance premiums Increase?
As gender is one of the key factors that Insurance Companies have always considered when calculating premiums and now that insurers can no longer consider a customer’s gender, it is expected that the cost of premiums for some products may be affected.
The gender effect will result in most women having to pay more for life and critical illness, but less for income protection. Men, on the other hand might enjoy some reductions to the cost of life and critical illness cover, but pay more for income protection.
Insurance Companies are in the process of re calculating the cost of providing cover and more will become clear over the coming weeks and some insurers are encouraging you to ‘buy now whilst stocks last’, so it’s important to consider your needs and take advice.
Will it affect my existing policies?
Only new insurance policies and renewals will be affected by the change. Existing annuities and life policies should not be affected, although any that have renewals and reviews built in, may be affected. So, if you are considering making any change or if your policy renewal falls around 21 December 2012, you may want to contact your insurer or speak to an independent financial adviser to understand what your options are.
What do I need to do now?
If you have an existing insurance policy, it should not be affected until it is due for renewal, or if you intend to purchase a retirement income product, such as an annuity, around this time, you may want to speak with your insurer or an independent financial adviser for more information and guidance.
The benefits of Insurance are a key factor in any financial planning and it is important that you stay protected and get advice to ensure your policies are always suitable for your needs.