The New Gender Directive

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Review your cover levels now !

As most people know there are differences in the life expectancy of Men and Women – on average Women live longer than men. This statistic is currently taken into account when actuaries work out the price of Life Assurance, Critical Illness insurance, Income protection insurance and the cost of buying a pension. It has a direct impact on the prices that are charged to men and women for these financial products.

From December 21st 2012 this is going to change.

Under a ruling from the European Court of Justice, it will no longer be permissible to operate gender specific rates. From that point on all Pension annuities. Life Assurance, Critical Illness and Income protection insurance will have the same price for men and women.

What this means

The impact of this depends on the cover type (and your gender !) – the table summarises the winners and losers.

Financial Product
Pension annuities
Life Cover
Income Protection
Critical Illness

Impact post December 21st
Costs for Females will increase
Costs for Females will increase
Costs for Males will increase
No significant change

Unfortunately, as is often the case, there is no indication that there will be any substantial positive impact from this development – i.e. where the cost of Life Cover increases for Females it doesn’t appear likely that there will be any substantial decrease for Males.

What you should do

Existing policies in force prior to the 21st are not effected by the ruling. So if you are considering putting any of the above covers in place in the near future then you should contact HC Financial Advisers and establish whether you might be better served putting your new cover in place before the changeover. If you have convertible or extendable cover you may wish to consider exercising your conversion option now rather than after the 21st of December. In any event, use this date as an opportunity to review your pension and protection covers – it may save you some money.