Life insurers unmoved by Aids rethink: Premiums that soared for young single men during the late 1980s are unlikely to be cut, despite the official line that hetrosexuals run a relatively small risk of getting the disease

THE announcement last week that heterosexuals run a significantly lower risk of contracting Aids than homosexuals and drug users has prompted a dramatic switch by the Government to target its resources on the higher-risk groups. But insurance firms are not in any rush to review life premiums, even though many imposed swingeing increases in 1988 at the height of the Aids scare - up to threefold on premiums for young single men.

Graham Allan, actuary at Zurich Life, said: 'Politicians are always influenced by the loudest voices, and at the time they were the ones with the most pessimistic outlook. Now they are having to think again.'

But while the Government admits to the need for a change of policy, the insurers have no plans to alter their stance. A spokesman for the Association of British Insurers said: 'The Government announcement is certainly a step in the right direction. I do not know whether rates will go down. The insurance companies will probably wait for specific statistics.'

Commercial Union increased its premiums dramatically for those in their twenties and thirties when Aids was top of the scare list. The company even offered a cheaper life insurance policy that excluded death by Aids.

A spokesman for CU said: 'We keep our rates in general under continuous review. There is no change anticipated in the immediate future.'

None of the other life insurance companies we spoke to were planning to cut premiums.

As a result of the Aids panic of the 1980s, so-called lifestyle questions, covering sexual and drug-taking practices, are now asked of everyone taking out life insurance.

Despite the improved outlook for heterosexuals, there is unlikely to be any change to these questions, although there is some doubt whether people answer them honestly.

'If a husband and wife are sitting at home filling in a proposal form on his life, he is hardly likely to confide that he has a boyfriend as well. We find that people are more honest in the context of having the medical examination,' Mr Allan explained.

The questions are now an accepted part of the insurance industry, and he believes it is going to take 'something significant to push us away from them'.

Mr Allan said two single men who applied for a joint mortgage with life insurance need not fear they would automatically be turned down. The insurer would look at all the circumstances.

'But offering insurance to promiscuous homosexuals is very high-risk. However, if someone is in a steady relationship and tests HIV-negative, then that could be a different matter.'

Insurance companies have to monitor all medical trends, particularly for term insurance rates. Term insurance is cheap, if not cheerful; it pays out only if you die during the term. However, it is a good bet if you want low-cost, no-frills cover. And for many young families, that is all they do need initially - not the all-singing, all-dancing policies sold by some over-exuberant life sales staff.

Standard term insurance products are known as level benefit policies - the amount they guarantee to pay on your death does not alter, nor do the premiums through the term of the policy. In choosing one of these, cost is the only criterion.

Some insurers have premiums that are open to review. These companies have a far less alarmist view about Aids than insurers offering fixed-premium contracts. They know they can increase the premiums at the drop of a hat if they subsequently decide their calculations are wrong and the number of people dying is higher than originally expected.

Equitable Life has a contractual and an actual premium rate. The 25-year-old male in our table contracts to pay pounds 42.17 a month, but for the time being will only be asked for pounds 12.17.

Companies with a flexible approach to premiums do not always offer the cheapest deals. Some are more competitive for males than females, and at various ages. So you should always get independent advice on the best premium rate.

It is also important to consider the underwriting policy of the company. Do not accept the first cheap quote, particularly if you are overweight. If you are a big, beefy rugby player, you could be given a much larger loading by some companies than by others.

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