On December 21st 2012, a new EU Gender Directive will come into force that means women will have to pay the same amount as their male counterparts. Typically, women were given cheaper policies on life, car and critical illness cover but as soon as the gender ruling comes into force, they will no longer see any offset, due to their sex. This is because insurers must overhaul the way they set premiums once the controversial ruling bans the use of gender in such calculations. Insurance providers are therefore urging women to take out vital cover, before the ruling goes ahead.
The three main areas that are affected are life, car and critical illness cover but as we have already focused on car insurance in a previous article, here we shall target life and critical illness.
Life insurance is where there is a sum of money that is paid out when the policyholder dies. This type of policy is vital for anyone who has dependents, such as parents or partners that want to prevent their spouses from suffering financial hardship in the event of their death. Critical illness insurance will pay out on the diagnosis of a range of serious conditions during the term of the policy. It could therefore help to cover the cost of any treatment, as well as allowing the policyholder to ensure his or her loved ones are financially secure.
The reason women have typically paid less than men in the past for both life and critical illness insurance because statistically it has been shown that they have a longer life expectancy and make fewer critical illness claims. Therefore their policies are less likely to pay out as a result, making them less of an insurance risk if you like. However, as from December 21st, it is no longer admissible for insurance companies to take gender into consideration when calculating policy premiums. It is thought that as a direct result of this ruling, women’s life insurance premiums could rise by an estimated 15% to 33%, while women’s critical illness premiums are expected to leap by around 16%.
So what can you do to avoid any massive price hikes? Well, as most people usually will purchase life insurance and critical illness cover only once in their lives, if you buy before December 21st, you will avoid the EU ruling. However, insurance companies are expecting a high demand and although some have set up dedicated teams to cope with the deadline, it can take several weeks to process applications. Our advice therefore is to apply now to avoid disappointment.
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