European Gender Directive
With effect from 31st of December this year Insurance companies will no longer be able to take gender into account when calculating their premiums. This change resulted from the European Court of Justice ruling that it would be deemed discriminatory for an Insurance Company to calculate premiums based on gender.
Which policies will be affected?
In the protection market, different types of policies will be affected in different ways:
Currently, Life insurance premiums are around 15-20% more expensive for men. Insurance Companies are unlikely to reduce the cost of men’s insurance premiums to fully close the gap and therefore premiums for women are expected to increase.
Legal & General recently released figures suggesting that the average premium for a 39 year old woman with a decreasing Mortgage Protection policy over a 21 year term could increase by as much as £1,800 over the term of their policy.
Income protection policies have the opposite implications and are currently more expensive for Women. As a result of the Gender Directive, premiums for these policies for men are expected to increase.
Will I be affected?
Many people who already hold Life Insurance policies have worries about their existing premiums increasing. Someone who already has a policy in place which has Guaranteed Premiums, will see no change to their premiums until the end of the policy. Anyone who has an existing policy with Reviewable Premiums, should check the position with their insurance company – ideally well before the Gender Directive comes into force.