The soothsayers believe that the Mayan calendar marks December 21st 2012 as the day the world will end. Collectively they can’t make their minds up how the world will end, but theories range from a collision with the fabled planet x to seismic disturbance. For conspiracy theorists they could point to the fact that life cover and income protection right across the UK is going to become much more expensive from that day onwards. So all the life companies know something as this would be an indicator of at least increased risk, even if they are unconvinced that the world will end after this date.
Unfortunately for the conspiracy theorists the reasons for the increases are a little more down to earth, as EU gender directive comes into force on that day. This means that no insurance provider will be able to use gender to calculate premiums. Therefore, men and women must pay the same premiums from 21st December 2012, and from January 2013 tax charges on insurers are going to adversely affect them and impact on premiums further.
These changes are giving people an opportunity to make savings by taking out a plan before December 21st. Women have historically paid less for life cover due to greater live expectancy, but with the equalizing of premiums they could be paying up to 15% more for cover. To illustrate this using a Legal & General example; a 39-year-old female will save over a thousand pounds over a 21-year term on a £90,000 decreasing life and critical illness policy by acting now rather than later. On the flipside men have usually paid less for their income protection than women because although life expectancy is less, they tend to suffer less illness during their working lives. However, the EU Directive could increase their premiums by 25%.
Over half the population has no life cover. So it is worth asking yourself a few questions to see if you need it, or need to adjust your cover. For example what financial support do you have in place if you had to stop working due to critical illness and you were unable to return to work? Or how would you cope if a partner you depended on financially were to die suddenly or get a critical illness? Then finally, could your family continue in the lifestyle they are accustomed to without you and your income? If the answers to these questions indicate a life cover/protection gap then it is time to think about protecting yourself whilst the cost could be cheaper. Why wait and end up paying more for the same cover later.
So although you could wait and see if the world does actually end on December 21st so as not to waste your premiums, realistically I think it is worthwhile taking action now rather than later and protecting your world. Although just to be on the safe side I have made sure we have our Christmas party on December 16th.
Kieron Bassett Financial Services have two Independent Financial Advisers who specialise in life cover and protection. Contact us on (01524) 832057, via e-mail, info@kieronbassett.com, or visit www.kieronbassett.com.
Kieron Bassett DipPFS
15th October 2012
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