Your postcode costs you a fortune

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Postcodes are one of the last permitted forms of discrimination. Your postcode could be costing you a small fortune in everything from pensions to car insurance, home insurance and healthcare.

So what is your postcode costing you?

The risks in your area
A big part of the trouble is that insurers try to make guesses about the risks you face and the resulting risk they are taking on when they sell you a product. Traditionally they used things like gender and age, but as these become political minefields, the impact of your postcode is rapidly moving up the list.

Insurers are setting greater and greater store by where you live, and as a result your address could cost you thousands.

So what are the costs?
Home insurance is perhaps one of the most obvious, as areas with high crime rates are bound to cost you more as you are at more risk of being broken into or being a victim of vandalism. Car insurance, likewise, is affected by high crime rates.

Less obviously, but more expensively, there are pension annuities. Those who live in areas deemed to be more upmarket are expected to live longer. Annuity companies, therefore, calculate that you'll be taking your pension for longer, so they'll give you less per month for your money than someone living in a less desirable area. The difference can easily add up to thousands of pounds a year.

Lenders will also take your postcode into consideration when you apply for a loan or mortgage. If those in your area have defaulted on their loans more than is typical, you could find it disproportionately difficult to get a loan - which may mean paying over the odds in interest or not being able to borrow at all.

Indirect costs
Then there are the schools to consider. End up in the wrong postcode and you could be one of the many thousands whose choice of state school is one of a failing school or a massively-oversubscribed better school. If you have such high concerns that you cannot face sending your child to a failing school, you could suddenly see education costs hit more than £30,000 - which is a hell of a price to pay for your postcode.

Then of course there is the most high-profile postcode lottery of all, the NHS. Those running the commissioning in your area will decide whether to fund certain life-changing treatments. If you fall into the wrong area you face a shorter or lower quality of life, or spending everything you have ever saved on the treatments privately.

So what can you do about this? On a purely financial basis, many of these things mean it's well worth moving if you find yourself in the 'wrong' area. Schools and hospital treatments alone make the cost of moving far lower than the cost of paying for these things yourself.

However, when it comes to something like pension annuities, the decision is much tougher. Would you prefer a higher monthly payment and life in a less desirable area, or to stay put and pay the price?

So what do you think? Would these costs push you out of your postcode, or are they a price worth paying? Let us know in the comments.
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