EU Gender Directive

May 11, 2012

On 1 March 2011, the Court of Justice of the European Union (ECJ) published its ruling on the legality of Article 5(2) of the Gender Directive 2004. The ECJ has reached a decision that, with effect from 21 December 2012, the use of gender as a factor must not result in differences to individuals’ premiums and benefits for insurance and related financial services contracts.

Simply put the changes taking effect at the end of this year means that women are likely to have to pay more when taking out new life cover and critical illness cover. It could cost around 15%* more for your life cover if you wait to buy it after 21 December 2012 so why would you want to pay more when you can act now?

If you are even thinking twice about why you might need cover here’s a few questions to ask yourself:

• What financial support do you have in place if you had to stop working due to critical illness? What if you were unable to return to work?

• How would you cope if a partner or someone you depend on financially were to die suddenly or get a critical illness? How would they cope financially if anything happened to you?

• Could your family continue in the lifestyle they’re accustomed to without you and your income?

If you’re a stay at home mum, don’t underestimate your value either, recent statistics from Bright Grey show that the cost of paying someone to carry out the many tasks us mums do could be more than £30,000 per annum.

Consider then how your family would copy financially if you were to die or become too ill to keep things running, how much would be required for childcare if your partner had to manage on their own?

Having the right protection in place can provide peace of mind when it’s needed most and if we girls are going to have to pay more in future then there is no better time like the present to get the cover in place.

Here’s an example of the potential impact of a rise in premiums to come:

Female aged 39 – £90,000 of Decreasing Life and Critical Illness Cover over a period of 21 years **

No one likes having to pay for insurance so why pay more than necessary – act now and get in touch to find out how we can help you get the right cover at the right price.

Even if you already have cover now is the time to review it and ensure if you need to increase your sum assured or add more to your plan you can do it without paying more than required.

More next week on the changing face of life and critical illness cover and some new options we are now looking at.

 

Dr Claire Armstrong

 

*HM Treasury Consultation Document, December 2011

**Premiums are correct as of 29/03/12, supplied by Legal & General and are for illustrative purposes only. 15% increase has been assumed based on current pricing in relation to the changes to the EU Gender Directive with effect from 21/12/12. Your actual premium will depend on your individual circumstance and could be higher or lower than 15%

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The fundamental need for protection

June 7, 2011

Reading an article in the paper the other day reminded me that one of the most basic functions of my job is in ensuring that clients are adequately protected with life and critical illness cover. This is arguably the most important but often the least appreciated part of my work.

We all have stories of untimely death or serious illness and how families been devastated but have survived because of having financial protection in place.

I’m not going to go into all the details of what plan, who with or what type of cover at this stage but I am going to point out some areas that must be addressed.

I will not be alone in noting that clients have a reluctance to paying for something “they may not need” and tend to try and talk the cost of life and critical illness cover down to a budget.

We use Voyant cash flow modelling to determine the actual financial cost of someone dying early or suffering a critical illness which tends to bring some serious reality to the levels of cover needed.

Often clients will have some protection in place (flogged by a bank in many instances) which the level of cover bears no resemblance to the actual level of risk. There are a lot of fans of nice round numbers out there and clients are usually at a loss as to why a particular level of cover has been arrived at.

Establishing with clients the real cost of early death or serious illness by more rigorous methodology is paramount and the costs of providing this cover are then seen in the right context.

I find that people do understand the need for cover and are much happier to have the right level of protection in place once they see the real amount of money required to make sure their family will be financially protected if the unthinkable happens.

Once we have the right numbers established, then using the appropriate trusts to ensure swift dispatch of any monies in the event of claim should be a given.The option of using Relevant Life policies were possible also adds a very welcome 20% corporation tax saving on premiums.

So to summarise, don’t leave it to chance; make sure the amount of cover is relevant to the level of risk and get the proper amount and type of cover you need.

If you need us to give you a more accurate figure as to how much cover you might need, contact Malcolm Stewart our Voyant guru on 0131 273 5202 and he’d be happy to help out.

Roland Oliver

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