Life insurance premiums for women are set to rise by around 15% when an EU Gender Directive comes into effect on 21 December.
To ensure that you secure the most competitive premiums for your needs, you can compare life insurance with MoneyExpert.
The new rules will mean that insurers will no longer be able to factor gender into premium calculations, effectively creating gender neutral pricing.
Traditionally women have been able to enjoy lower premiums than men, because of their longer life expectancy.
As an example estimates from a price comparison website suggest that a 30-year-old woman would pay an average of 22% less than a man for an equivalent amount of life insurance.
While £200,000 of life insurance over a 25-year term would incur an average monthly premium of £7.84 for a woman, a man would have to pay a higher average figure of £9.48.
While the impact of the Gender Directive on women’s premiums has been highly publicised, new taxation changes could also see premiums soar for men.
The updated rules mean that insurers can no longer offset the cost of writing a policy against the profits of the business, which will increase the cost of writing the policies for the insurer.
These costs will then be passed on to policyholders, male or female, potentially negating any benefit that male policyholders could achieve through gender neutral pricing, and increasing female policy holders premiums further.
“We have lost the tax relief on the expense of writing the business and we expect that across the market, it will bring a step change in the way policies are priced. It is expected to increase prices around 10% across the board, but we think that it on the low side,” said Tom Allen, head of protection pricing at Aviva.
“For males that would wipe out the decrease they would have got in the move to gender neutral pricing.”
However, Mr Allen goes on to say that the impact of both changes should only result in a marginal rise in monthly premiums.
“If we look at the tax change and gender neutral pricing, what it means in pounds and pennies is not a great deal; on a policy that costs £10 to £20 [a month] it may go up £2 to £5,” he added.
You can compare life insurance with MoneyExpert.
