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Why you should buy life insurance now
You’ve probably heard about the EU gender directive. This new law means that insurance companies can no longer take your sex into account when they price their products. The directive came into force at the end of last year.
In the pre-directive world, men usually had to pay more for life insurance than women. That was because men tend to have shorter lives than women, so it’s more likely that insurers will receive a claim from a man during the term of the policy rather than a woman.
So what has happened to prices since the directive came into force?
Well, you might imagine that premiums for women would go up while premiums for men would fall.
But it hasn’t been that simple. There’s been much more volatility than expected. In fact, some insurers have cut premiums – for both sexes – whilst other insurers have put them up.
I think this volatility gives consumers a big opportunity to get a good deal.
We’ve got some figures which compare the premiums that were being charged on October 9th 2012 with the premiums on 9 January 2013.
All these figures are for policies that combine life insurance and critical illness cover. (In other words, these policies will pay out if you die or if you’re hit by a serious illness that was listed on the original insurance policy.)
Insurance premiums for £100,000 plan with 25-year term.
Male smoker aged 40
Bright Grey (reviewable rates)
Legal & General (reviewable)
Male smoker aged 50
Scottish Provident (guaranteed rates)
Female smoker aged 50
Scottish Provident (reviewable)
Source: CI expert
The differences between the various policies are huge!
It looks like we’re in a period price volatility while the insurers figure out how they want to price risk going forward. I think that’s an opportunity for people who don’t have life insurance as they can potentially get good deals if they shop around. Indeed they may be charged less now than they would have been three months ago.
It’s also worth remembering that the UK life insurance market is very competitive these days. Indeed Alan Lakey of Highclere Partners told me that the UK is the cheapest country in the world for life cover. That’s pretty extraordinary given that, for example, average life expectancy in Japan is three years longer than in the UK.
What’s more, it’s very easy to compare prices these days – just by using an online comparison service.
Price isn’t everything
That said, price isn’t everything. You also need to make sure that the policy is right for you and your needs.
This is especially true if you’re going to buy critical illness cover. These policies are supposed to help you if you become ill, but they’ll only pay out if your illness was cited on the original insurance policy. Different policies cover for different illnesses and the cheapest policy may not be the best.
So you may want to visit a financial adviser who can help you find the best policy for you and your circumstances.
And regardless of whether you use an adviser or go it alone, make sure you read all the small print before you hand over any cash.
Who needs life insurance?
If you don’t have life insurance now, you may be wondering if you need it.
And the truth is, not everyone does. The big question is whether you have any dependents. What would happen if you die? If you’d leave behind someone who is struggling to pay a mortgage, then you should probably get life insurance. But if you’re a young single person living in a rented flat, there’s probably no need to pay out.
However, you could argue that every working person should get critical illness cover as you never know when a serious illness might strike.
But the important message is this: don’t assume that the EU directive has sent the price of life insurance policies skyrocketing. There are still bargains to be had if you look in the right place.
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I'll leave you to figure the rest out.
Jeem Pete..........................err ....................what you are asking for has actually happened.
The Gender Directive is in force, and as the article says, some premiums have gone up and some down.
Although Insurance Giants can sometimes have the accusation you have made leveeld against them, in this is case they are at the mercy of this wierd and malfunctioning orgainsation called The European Community.
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