I am surprised that this law, which makes the pricing of insurance based on whether you are male or female illegal from 21st December 2012, has not received more media attention, as it has important repercussions on the future pricing of insurance contracts.
To be specific contracts entered into after midnight on 20th December 2012 cannot discriminate by sex for product pricing. However, the law doesn’t take account of pipeline applications; the contract has either commenced or it has not.
According to Martin Werth from Ageas Protect (formally Fortis Life), after 20th December 2012 male life and critical illness rates will increase by up to 5 per cent and female life and critical illness rates between 20 per cent and 25 per cent. For Income Protection male rates could increase by 10 per cent to 20 per cent, but females rates could fall by 15 per cent to 25 per cent.
Anyone wanting to apply for insurance before the new rules take effect will need to be mindful of the potential delays in underwriting that could mean that applications made before the deadline can not be started in time. The longest delays are likely to be where GP reports are required, followed closely by medicals, so as we move closer to the deadline care will have to be taken to select insurers with the lowest requests for GPR and medicals.
The cost of being wrong footed by these new rules could be high. For a £50 per month premium over 30 years, a 25 per cent unnecessary female rate increase could cost £4,500. It could therefore be a costly mistake to try to apply for cover yourself and taking professional advice is advisable.