Check your plans before the gender gap closes

Both sexes will see changes in product costs once EU rules come into force

There are many reasons it's great to be female. Though advantageous rates on financial services may not immediately spring to mind, women have benefited from a range of deals as we live quite a lot longer, on average, than men.

It hasn't all been rosy, with things such as annuity rates lower for women, but with new rules being handed down from Brussels, that's all about to change. Both sexes now have just a few months to make the most of the status quo on a host of products before the chance is lost.

Insurance

The EU gender directive comes into force on 21 December 2012 and from then on it will be illegal for an insurer to use gender as one of the risk factors when determining an insurance premium.

At the moment, women generally pay less for car insurance as statistically they are less likely to have an accident than men. They also pay less than men for life insurance. Men, on the other hand, receive a bigger annuity as they have a shorter life expectancy.

The directive outlaws such discriminating between the sexes. However, it's unlikely that gender-neutral rates will simply settle in the middle for any type of insurance, and are likely to lean towards the "more expensive" sex.

Insurers say this is due to other influencing risk factors, but a cynic might say they are simply cashing in on the new rules.

Annuities

When you retire you can use your pension savings to purchase an income for life, known as an annuity.

The amount of annual income that you can purchase will vary depending on the value of your pension fund, prevailing market conditions, your age, state of health, and, currently, your gender. With all other factors being equal, men who purchased an annuity from NFU Mutual in July 2012, secured on average 6 per cent more annual income than women.

Roger Ramsden, the chief executive of Saga Services, says: "It is generally believed that the new unisex rates will end up sitting somewhere between the current male and female rates; so in theory male rates may reduce, and female rates may rise as a result."

This means that men retiring soon should act sooner rather than later when it comes to buying an annuity.

"Because of this directive and other pressures on annuity rates, if you are a man who is planning on buying an annuity within the next few months, you'd be crazy to delay until after 21 December," says Tom McPhail, head of pensions research at Hargreaves Lansdown."For women the impact is harder to assess. There may in fact be no compensating uplift in rates, though they may rebound in time once insurers have found a new equilibrium."

Life insurance

Statistically women live longer than men, so life insurance is generally cheaper for women. Research from comparison site Money Minder shows some insurers are charging men up to 35 per cent more than women for equivalent life insurance.

But this will change in December – or earlier as some insurers won't necessarily wait until then to introduce gender neutral pricing.

Insurers are more likely to increase premiums for women than significantly decrease those for men. If women were to find their premiums raised to the same levels currently offered to males, the increased cost of their insurance over the term of the policy could run into several thousand pounds. For that reason, women thinking about buying life insurance should do it now.

"Of all the projections I've seen, I haven't once seen a scenario where prices for women will do anything other than rise," says Matt Morris, a senior policy adviser at broker Lifesearch. "Also, now is the time to review existing policies too. It will probably be a long time before prices will be this low for women again."

Other protection products

Currently premiums for other protection products such as critical illness cover and income protection are also influenced by gender. Women currently pay more than men for income protection but less for critical illness.

Insurer LV= says women currently pay 65 per cent more than men for income protection. After December it estimates they will see their cost of premiums fall by approximately 28 per cent while men will see a rise of 20 per cent.

Meanwhile the cost of critical illness cover will soon be affected by other new rules in early 2013, as well as the EU gender directive.

Known as the income minus expenses rule (or I minus E), life companies will no longer be able to offset costs of selling life assurance/critical illness cover against investment income. In short, this means the cost of policies for both sexes will rise. "In relation to critical illness cover, men generally pay 10 per cent more than females. However in some cases women do pay more than men," says Colin Payne of mortgage broker Chapelgate Associates. "Premiums for males are expected to increase by up to 6 per cent and females by up to 16 per cent."

Car insurance

Statistically women are safer drivers than men with the cost differences most exaggerated for young drivers; men aged between 17 and 20 currently pay almost double the premium of women the same age.

But young female drivers could be particularly affected by the changes after 21 December. Association of British Insurers (ABI) research predicts an average increase of almost 25 per cent for women under 25, while young men could find their premiums dropping by around 10 per cent.

"Insurers will argue that, statistically, young men cost more to insure as they make more expensive claims than women, and that this is reflected in the premiums that they are quoted," says Scott Kelly, the head of motor at Gocompare.com. "Insurers are unlikely to absorb the risk of insuring young male drivers by lowering their premiums to fall in line with women's, it's more likely that women will end up paying more."

Statistics from both GoCompare and Moneysupermarket.com suggest that insurers have not yet altered their pricing for gender which means, for now, women can still benefit from cheaper car insurance premiums.

"If anything, premiums for women seem to be particularly competitive at the moment and it may be the case that insurers are looking to buy up female business in order to price them accordingly when they come to renew after the directive deadline has passed," says Peter Harrison of MoneySupermarket.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Sport
formula oneLive lap-by-lap coverage of championship decider
News
Lily Allen performs on stage at Splendour In the Grass 2014 on 27 July, 2014, in Byron Bay, Australia
people
News
Boxing promoter Kellie Maloney, formerly known as Frank Maloney, entered the 2014 Celebrity Big Brother house
people
Arts and Entertainment
tvStrictly presenter returns to screens after Halloween accident
PROMOTED VIDEO
News
video
Arts and Entertainment
Jerry Hall (Hand out press photograph provided by jackstanley@theambassadors.com)
theatre
News
peopleFormer civil rights activist who was jailed for smoking crack cocaine has died aged 78
Sport
Manny Pacquiao lands a blow on Chris Algieri
Pacquiao retains WBO welterweight title – and says he wants Mayweather next
Arts and Entertainment
tv
Arts and Entertainment
Carrie Hope Fletcher
booksFirst video bloggers conquered YouTube. Now they want us to buy their books
Arts and Entertainment
Damien Hirst
artCoalition's anti-culture policy and cuts in local authority spending to blame, says academic
News
i100
Sport
premier leagueMatch report: Arsenal 1 Man United 2
Arts and Entertainment
Kirk Cameron is begging his Facebook fans to give him positive reviews
film
Arts and Entertainment
Jason goes on a special mission for the queen
tvReview: Everyone loves a CGI Cyclops and the BBC's Saturday night charmer is getting epic
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Reach Volunteering: Trustee – PR& Marketing, Social Care, Commercial skills

    Voluntary Only - Expenses Reimbursed: Reach Volunteering: Age Concern Slough a...

    Reach Volunteering: Charity Treasurer

    Voluntary Only - Expenses Reimbursed: Reach Volunteering: Crossroads Care is s...

    SThree: Trainee Recruitment Consultant - Soho

    £20000 - £25000 per annum + OTE £35,000: SThree: We consistently strive to be ...

    Ampersand Consulting LLP: Markit EDM (CADIS) Developer

    £50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

    Day In a Page

    Mau Mau uprising: Kenyans still waiting for justice join class action over Britain's role in the emergency

    Kenyans still waiting for justice over Mau Mau uprising

    Thousands join class action over Britain's role in the emergency
    Isis in Iraq: The trauma of the last six months has overwhelmed the remaining Christians in the country

    The last Christians in Iraq

    After 2,000 years, a community will try anything – including pretending to convert to Islam – to avoid losing everything, says Patrick Cockburn
    Black Friday: Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

    Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

    Britain braced for Black Friday
    Bill Cosby's persona goes from America's dad to date-rape drugs

    From America's dad to date-rape drugs

    Stories of Bill Cosby's alleged sexual assaults may have circulated widely in Hollywood, but they came as a shock to fans, says Rupert Cornwell
    Clare Balding: 'Women's sport is kicking off at last'

    Clare Balding: 'Women's sport is kicking off at last'

    As fans flock to see England women's Wembley debut against Germany, the TV presenter on an exciting 'sea change'
    Oh come, all ye multi-faithful: The Christmas jumper is in fashion, but should you wear your religion on your sleeve?

    Oh come, all ye multi-faithful

    The Christmas jumper is in fashion, but should you wear your religion on your sleeve?
    Dr Charles Heatley: The GP off to do battle in the war against Ebola

    The GP off to do battle in the war against Ebola

    Dr Charles Heatley on joining the NHS volunteers' team bound for Sierra Leone
    Flogging vlogging: First video bloggers conquered YouTube. Now they want us to buy their books

    Flogging vlogging

    First video bloggers conquered YouTube. Now they want us to buy their books
    Saturday Night Live vs The Daily Show: US channels wage comedy star wars

    Saturday Night Live vs The Daily Show

    US channels wage comedy star wars
    When is a wine made in Piedmont not a Piemonte wine? When EU rules make Italian vineyards invisible

    When is a wine made in Piedmont not a Piemonte wine?

    When EU rules make Italian vineyards invisible
    Look what's mushrooming now! Meat-free recipes and food scandals help one growing sector

    Look what's mushrooming now!

    Meat-free recipes and food scandals help one growing sector
    Neil Findlay is more a pink shrimp than a red firebrand

    More a pink shrimp than a red firebrand

    The vilification of the potential Scottish Labour leader Neil Findlay shows how one-note politics is today, says DJ Taylor
    Bill Granger recipes: Tenderstem broccoli omelette; Fried eggs with Mexican-style tomato and chilli sauce; Pan-fried cavolo nero with soft-boiled egg

    Oeuf quake

    Bill Granger's cracking egg recipes
    Terry Venables: Wayne Rooney is roaring again and the world knows that England are back

    Terry Venables column

    Wayne Rooney is roaring again and the world knows that England are back
    Michael Calvin: Abject leadership is allowing football’s age-old sores to fester

    Abject leadership is allowing football’s age-old sores to fester

    Those at the top are allowing the same issues to go unchallenged, says Michael Calvin