Skyrocketing Life Insurance Premiums-Can ANYTHING Help?

Life insurance premiums for women living in the UK are heading for an all-time high as the monthly cost for policies for women increase upwards of twenty percent! A recent article in The Guardian reported that women are paying one fifth more on life insurance since the implantation of the European Union’s Gender Directive in December 2012.

Does anyone else see the irony in this situation? Laws that were implemented with the intention of promoting fairness and equality of gender laws that do not allow businesses to discriminate by gender when offering any types of goods or services- the very same laws of equality that feminists have struggled so long to win- these laws now appear to be backfiring in terms of the expenses of life insurance premiums. This reported twenty percent hike in costs has a significant negative impact for many women already struggling to cope with increased costs of living.


Are all women affected?

Traditionally, women in general have always paid less than men in general for life insurance premiums, due largely to the fact that women tend to live longer than men and insurance companies took into account that paying monthly premiums for a much longer period of time deserved a discount on the amount charged for those premiums. With the implementation of unisex pricing in the insurance industry, the longevity factor can no longer considered when calculating premiums. Compliance with the European Union’s Gender Directive means that insurance prices are largely calculated on the personal circumstances of the individual.

The woman most affected by gender-neutral insurance pricing appears to be the 20-year-old female smoker, now paying 20.4 per cent more for a 35-year term policy. For example, where the monthly cost for this policy was £6.08 (prior to the directive), the cost of the policy is now £7.32. For the 25-year-old female smoker, a 35-year term policy with an assured sum of £330,000 saw a 20.2 per cent increase in monthly premium cost.

The group of women least affected by the gender-neutral insurance pricing directive appears to be the 45-year-old female seeking a 20-year term policy with an assured sum of £330,000, whose premium has been increased with a smaller rise of 1.5 per cent.

What can women do to keep their life insurance premiums down?

As life insurance premiums for women are soaring, many women are desperate to find solutions for keeping costs down. Try not to panic, because there are ways to cut down the cost of insurance and means to lower your existing monthly life insurance premiums.


* Research different insurance providers’ prices with comparison websites

Unfortunately, loyalty isn’t always rewarded with the best prices, and staying with the same insurance company year after year doesn’t mean you’re paying the lowest available premium. Sure, you can just keep doing the same thing month after month, but that may mean staying in a rut that gets deeper and deeper. Or you can take off the blinders and do some looking around. Comparison websites can be good places to find the best deals. Not only do they tend to simplify an often laborious, complicated process, but they also generally offer the lowest prices.

* Stop smoking… right now!

This is guaranteed to lower your life insurance premium! Male or female, a smoker pays twice as much as what a non-smoker pays for life insurance. As an example, a 35-year-old female smoker wishing to purchase £200,000 level term insurance over a 25-year period would on average pay almost double that of her non-smoking equivalent. There’s a simple explanation for this extreme discrepancy: medical expenses during a smoker’s lifetime are nearly double the medical expenses for the non-smoking equivalent.

It takes a year of remaining smoke-free after you’ve reported to your insurance provider your change in status for the discount to take effect- this means remaining free of all nicotine-based products (including nicotine gum.)

Steve Barnes, Financial Adviser at Endsleigh, said: “People should remember that any kind of smoking in a 12 month period classes you as a smoker in the eyes of an insurance company. It doesn’t matter if it’s an occasional secret cigarette in times of stress or a regular habit, in order to be classified as a non-smoker by life insurance companies you need to have abstained from smoking or from using nicotine replacement products for at least 12 to 18 months.”

Since, according to Dr. Oz, it takes ten years for your lungs to fully heal after you quit smoking, having to wait 12 months for the price to drop by half isn’t such a bad deal.

* Start young

Many young women seem less likely to consider the responsible decision-making involved with selecting and purchasing life insurance. However, younger insurance buyers benefit in numerous ways from beginning their policy as a youth, not the least of which is the fact that as a group younger life insurance policy buyers are quoted lower rates. This is due to the generality that all insurance quotes are assessed on the level of risk that you pose the insurance company, or in other words, how likely you are to make an insurance claim. If you are young, you are less of a risk in terms of life insurance and will therefore be quoted less than someone who is older.

* Choose the right kind of coverage

It is important to know the difference between term life insurance coverage and ‘permanent’ life insurance coverage. Term life insurance is the least expensive (and lowest when your young,) where a fixed amount death benefit is payable to your beneficiary if you die at any time during the defined term the policy is in effect. Most term policies are renewable, but premiums may increase with age.

Permanent life insurance coverage includes whole life and universal life policies. Whole life policies pay a fixed death benefit, but also provide cash value that generally builds up over time on a tax-free basis, and the policy owner is allowed to withdraw or borrow against the value of the permanent life policy. Premiums are at a fixed rate during the life of the policy. Universal life insurance policies are similar in that they also provide cash value, as with whole life policies, but the policy owner has the additional option to adjust death benefit amounts and premium levels throughout the life of the policy.

Some would advise that you should not consider permanent life insurance until you are out of debt and have access to substantial emergency reserves, meaning if you are a single person of modest means, there would be little point in purchasing anything other than term-based insurance.