Protection  

Getting to grips with G-Day changes

    CPD
    Approx.30min

    Unless you’ve had your head stuck under a planet-sized rock for the last few months you will be aware that at midnight on Thursday December 20th the ability to price financial services products by a person’s gender becomes a thing of the past.

    Actually, that is not quite as unrealistic as it sounds because in truth many advisers, especially those who do not write protection on a regular basis, have had one or two other priorities of late. But it’s not too late to swot up on all the changes and contact relevant clients accordingly.

    While the regulator is not a fan of scaremongering, this shouldn’t ever mean that clients aren’t told about important issues that most would genuinely want to know about.

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    The opportunity to talk to potential protection clients before price rises come into effect across protection insurance products in December has been picked up by a number of adviser firms, with many sending letters and email reminders about the changes.

    As one adviser recently put it: If it takes two months for you to decide you want it, fill out the forms, go through underwriting and so on – you’ve already missed the deadline.

    Insurers have known about ‘G-day’ (the date beyond which all insurers cannot differentiate between male and female lives on individual policies) deadline since March 2011 and some have launched a range of good communications which can help advisers.

    However, on the flip side we have spoken to hundreds of advisers in recent months through our independent protection training sessions across the UK and at times it seemed that around half of those we met were completely unaware of G-day and the potential client issues it brings, not just for protection but also for annuities. And let us not forget, especially for those with teenage children, that this also affects car insurance amongst other things.

    So, what is changing?

    Following a ruling from the European Court of Justice UK insurers will no longer be able to take gender into account when pricing financial services products. The change takes place at midnight on Thursday December 20th, though some insurers are changing their rates ahead of this date.

    Secondly, the way in which insurance companies are taxed is changing from the current ‘I-E’ regime to a profit-based method, which in short is also likely to increase some premiums.

    What can advisers do?

    • Understand what is changing, when it is changing and who it impacts

    For example, life cover rates for both sexes will increase, especially for females who generally life longer. Rates for critical illness will also increase as will income protection premiums for males. The increases here could range from 5-30% depending on the circumstances.

    IP rates for females could actually fall as IP has traditionally been more expensive for females and isn’t impacted by the tax change.