The new Gender Directive
With the new ruling find out what it means and how could it affect you
23 May 2012: On 1st March 2011, the European Court of Justice ruled that insurers will no longer be able to use a person’s sex as a factor in calculating the cost of their insurance. This ruling, known as the Gender Directive, comes in to effect on 21st December 2012 but some insurers are already preparing to change to gender neutral premiums in advance of this date.
Since this new directive is likely to result in men and women generally having to pay more for their insurance, here’s a quick Q&A to help you understand the ruling in more detail and to assess the potential implications for you.
Q1. What financial products are impacted upon by the Gender Directive?
The Gender Directive will apply to any financial product that uses gender as a factor for calculating the cost of insurance premiums. The following products (and this is by no means an exhaustive list) will be affected by the new ruling:
Q2. What is the impact of the Gender Directive on women?
Historically women have benefited when it comes to cheaper insurance premiums because, on the whole, they typically represent lower risks than men. For example, women tend to live longer than men, so pay in to their policy for longer and claim later. This pushes down the monthly cost of their cover. However, as the Gender Directive takes effect, such benefits are unlikely to exist and the cost of arranging most forms of insurance is likely to increase and become equal to the premiums paid by men.
It’s impossible to predict what the size of these premium increases will be, as the figures will vary across each product type and depend on an individual’s personal circumstances and the type of product and amount of cover selected.
Q3. What is the impact of the Gender Directive on men?
Whilst the Gender Directive is likely to have a less negative impact on men, some exceptions are likely.
For this reason, it’s just as essential that men, as well as women, take financial advice now to ensure their insurance needs are reviewed, understood and met.
The importance of getting the right advice
When it comes to insurance people often forget to think about protecting themselves and yet it’s arguably one of the most important financial decisions you can make. Financial protection is something we’re often afraid to think about. The thought of becoming ill, losing our jobs and dying are events we don’t want to consider. Yet the cost of ensuring that we or our family could cope if the worst does happen, could potentially cost you less than you’d pay for a quality Sky TV package or gym membership (depending on your personal circumstances and cover needs). With the Gender Directive looming, there has never been a better reason to put your insurance and protection cover in order.
Whilst some insurers may urge you to make a quick purchase, Nationwide would encourage all its customers to take advice, review their insurance needs and understand their options in order to make an informed decision on whether to arrange cover or not. Regardless of whether the Gender Directive causes premiums to increase or decrease in the future, the real urgency comes from needing to ensure that you and your family have the right insurances in place, based on your needs today.
In addition, if you’re approaching retirement and planning to purchase an annuity using your accumulated pension benefits, you should also take professional advice as the Gender Directive could affect the amount of income your annuity will pay out.
If you would like further information about the implications of the new Gender Directive and the protection and insurance options available to you, you can call us for an appointment on 0800 028 6029 or visit your local branch. Plus, as the directive begins to take effect, we’ll update the Your Nationwide website pages with related information you may find of use.