Women charged 20% more for life insurance

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The EU Gender Directive has pushed the cost of women's life insurance up significantly.

Women are paying as much as 20% more for life insurance since the European Union Gender Directive was implemented in December 2012.

The EU Gender Directive has been in place for just over a year and means insurers can no longer take gender into account when determining the price of insurance premiums. Women have traditionally benefitted from lower life insurance premiums as they tend to live longer than men, making a payout during the term of the policy less likely.

Prices across the board have seen a lot of volatility and there was a big increase in sales at the end of 2012 as people rushed to buy policies before the new rules were implemented.

Women paying more

In the past year the cost of life insurance premiums for men and women have changed by as much as 20%, according to research from Lifesearch.

It analysed the cost changes and found the biggest rise was 20.4% for a 20-year-old female smoker, buying a 35-year term policy with a sum assured of £91,000. The cost would have been an average of £6.08 a month before the directive and is now £7.32.

The second-largest increase was for a 25-year old female smoker with a 35-year policy and a sum assured of £330,000. The cost was £19.82 before the change in rules and would now be £23.83, a 20.2% rise.

Not all women will have seen their prices go up - it's largely dependent on the individual - but it is younger women who have seen the biggest increases.

The same quotes were taken for a 45-year old non-smoking female with a 20-year plan and a sum assured of £300,000. The average quote has gone up from £34.43 to £34.83 so a much smaller rise of 1.15%.

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Falling prices for men

As predicted the average cost of life insurance for men has dropped. Looking at the same statistics there was a 21.5% fall in price for a non-smoking male aged 50 with a 20-year policy and a sum assured of £230,000. The price fell by £12.06 from £56.05 to £43.45.

Men of all ages saw a fall in prices although it the change was much smaller for those under 30. For example the change for a 30-year old non-smoking man with a 25-year term and £95,000 sum assured was just 0.3%, from £6.41 to to £6.43.

Have prices settled?

Bonnie Burns, Director at Legal & General Retail Protection, suggests that although prices rose for
women by around 20%, this is now starting to settle down again.

"The market saw a decrease in sales in Q1 2013 compared with both Q1 and Q4 2012, reflecting the push to complete policies before the regulation change. Despite these disruptions, the market is now reverting back to normal levels as we would expect," she said.

Cut the cost of your life insurance

How to get the best price

The price of your life insurance can vary significantly due to many factors, such as the amount of cover you want, your age, your health and your lifestyle. It's also something that needs to be reviewed often, as your circumstances change, whether that means more children, a bigger house or an improvement in your health (giving up smoking for example).

However, it's worth remembering that this important insurance doesn't cost a fortune.

Cut the cost of your life insurance

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