Prepare now to beat unisex rates – European ruling on gender
Stuart Coombe, Paraplanner
discrimination will affect us all
Women's car insurance premiums to rise
Men's annuity rates to fall Review your finances now to beat unisex rates
The European Court of Justice ruled that, under sex discrimination laws, gender can no longer be used as a risk factor to calculate annuity rates and insurance premiums.
This means the insurance world is facing up to a big change in the way it conducts business – currently, gender is a fundamental consideration for insurance companies when calculating how much to charge, but thanks to the recent ruling, from 21 December 2012, providers will no longer be allowed to use gender as a risk factor.
This is bad news and will affect everyone in one way or another and it could be prudent to act now:
It is well known that car insurance costs less for women than for men, especially for young drivers where this difference can be as high as 50%, and this will have to be equalised in due course to comply with the ruling. This will inevitably see the cost of insurance for women rise but the amount of reduction – if any – applied to premiums for men is debatable.
Whilst motor insurance has grabbed the headlines, it is the implications on other areas that could be even more significant.
At present, men receive a considerably higher pension annuity rate than women at a given age to reflect the fact that they statistically have a lower life expectancy. But as a result of this ruling, annuity rates will have to change too. Anyone considering purchasing a pension annuity will see a change in the rate that they are offered. If or when this will happen ahead of December 2012 is not yet known, but it is likely that men will have a reduced annuity rate.
Other areas that will be affected include life insurance, private health insurance and private medical insurance, and, given that most of us have some exposure to at least one of these products, it is clear to see the major implication that this ruling will have.
Although the changes do not legally come into effect until December 2012, some insurance companies may change their practices sooner, and it is best to be prepared.
Some commentators have argued that a ‘domino effect’ could occur once the first of the larger insurance companies move to unisex rates ahead of the deadline, although, due to competitive pressures, it is unlikely that this will be this year.
However, what is known is that unisex rates and the consequences they will bring are now inevitable and depending on your circumstances, it may be in your interests to act now, for example to secure a potentially higher pension income or a lower rate for your life insurance to help protect your family.
Alternatively, you may need to save more for your retirement to get the income level that you are aiming for. A comprehensive review from an Old Mill Financial Planner can help you to ensure your financial goals are achieved.
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