There’s an old saying in my industry – “Life Insurance is never bought, it’s sold”.
Finances allowing, most people would agree that it is sensible to prepare for the financial consequences of things not going quite as you had planned in your life.
But actually getting round to starting a life insurance or health insurance plan – well that’s another matter…
There’s nothing like an impending event to get things moving.
Changes from 21 December 2012
The European Court of Justice has ruled that from the end of this year, insurers can no longer take a person’s gender into account when pricing their insurance premiums.
Well we all like things to be fair, but the girls won’t like this one. For the last 24 years, when in a financial planning meeting with couples, I have shared a smug, conspiratorial smile with the female, when her life insurance quote comes out often 20% cheaper than her male partner’s.
The fact that females statistically live longer than males will no longer cut any ice. At the end of the year, the cost of cover for males and females will be equalised.
However, industry insiders are saying they don’t expect there to be any winners in this scenario: Men will pay the same rates they have always paid, and women will pay more.
Rumour has it that life insurance companies will not even wait until December to factor in the changes. Prices could start to rise for women sooner rather than later.
Unfortunately there is bad news for the boys as well. They may be more likely to make a claim for life insurance, but they are less likely to make a claim for Permanent Health Insurance, or Income Protection. Females are apparently more likely to seek medical help when feeling unwell, and also more prone to chronic diseases . Because of this, the cost of Health Insurance is higher for females.
Same story – reverse the roles: The price of Permanent Health Insurance is likely to stay the same for women, but definitely increase for men.
Save yourself some money
There is something that you can do – and this could be the push that you need to get that life insurance finally sorted out. If you take out cover now, you could save yourself thousands of pounds over the term of the policy.
As long as you take out a plan with ‘guaranteed premiums’ – this means that once your plan is set up, the monthly premiums will never increase, irrespective of your age, changes to your health, or changes to legislation – you can protect yourself from any hike in cost.
A plan with ‘reviewable premiums’ may look more attractive, as the initial cost will be lower, but you will end up paying out much more in the long term, as premiums can be hiked by the insurance company every five or 10 years.
In case you were wondering – this will also apply to other types of insurance – car insurance for example. Unfortunately there is nothing you can do to avoid this, as car insurance is renewed every year.
Henrietta Oxlade is an Independent Financial Planner with Radcliffe & Newlands and MyFamilyClub’s in-house finance sage! She has been advising individual clients since March 1988, which is why many of her clients consider her part of the family. If you want to contact Henrietta, email us on [email protected] and we’ll put you in touch.