Personal Finance

Thursday 21 August 2014

EU directive pushes up life insurance costs for women

Charlie Weston Personal Finance Editor

Published 20/03/2014 | 02:30

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NEW rules to stop financial discrimination have seen the cost of life insurance shoot up for women.

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The EU-imposed measures ban premium prices being set on the basis of gender.

But women have been the big losers, with the cost of life insurance and mortgage protection policies rising by up to 25pc. Men have seen the cost of their premiums fall by close to 30pc, an analysis of the market carried out by Caledonian Life shows.

The EU Gender Directive was introduced here at the end of 2012 to stop insurers charging different premiums based on gender.

Traditionally, women paid less for life insurance and mortgage protection policies – a form of life insurance that pays out if the mortgage holder dies.

Women used to pay less than men for life insurance because they live longer and are therefore less likely to die during the life of the policy, leading to a payout.

Men die younger, leading to a higher risk of payout by an insurer, insurance experts said.

Caledonian Life looked at the cost of life cover over the past five years and found costs for men have fallen by between 8pc and 28pc.

Costs for women have gone up by between 1pc and 25pc, according to Rachel Purcell of Caledonian Life.

The results vary depending on whether the person insured smokes or not.

Ms Purcell said: "It would clearly appear that the EU Gender Directive has had the impact that was expected when it was instituted – both male and females now pay the same price for life cover.

"Unfortunately for females, that has meant an increase in what they would have had to pay for the same policy in the past, up to 25pc more in some cases," Ms Purcell said.

She said men have fared better in recent years with marked reductions. The life insurance market has also seen a fall in the cost of premiums due to people living longer and greater competition in the market.

"The public should remember that life cover is still extremely affordable, and much cheaper than they may expect. In fact, €240,000 worth of life cover is available from as little as €15.15 per month for 20 years, for a 30-year-old non-smoker. That's under €4 a week – less than what some people spend on coffee every day," she said.

The gender directive has also seen women lose out on motor insurance.

Traditionally, they paid less because they tend to have fewer claims, but the new directive has seen premiums rise for women, particularly younger women.

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