For example, did you know the European Union has issued a Gender Directive for all countries in the European Union not to discriminate against males or females when underwriting their insurance policies? This is not only for Life insurance but also for all policies, including car insurance.
Equality does not always have an advantage – This new directive means that women will bear the brunt of the increase, as historically women have been cheaper to insure than men. There have been many articles written in the financial press about the pros and cons of this new directive from the EU. We all recognise that men and women are physiologically different and should be assessed differently; however, the new rules come into effect from 21 December 2012.
So, if you are a woman, then according to research by HMRC, all premiums for women are expected to increase by 15%* due to this new legislation. And, interestingly, there has been no suggestion for a reduction in policy costs to achieve non-discrimination! If you are a man, do not think you have escaped, as although the new Gender Equality Directive will mean that women’s premiums are likely to increase, men will also not escape premium increases due to the removal of so-called ‘I-E’ taxation rules. This will increase the amount of tax life companies have to pay. Insurance companies will have to adjust to these new requirements, and premiums are expected to increase across the board, irrespective of gender.
These new requirements come into effect from the end of 2012, and predictions are premiums may see an increase between 10 and 15% to absorb the cost of the removal of the I-E taxation rules. The Deadline date for the Gender Directive is 21 December 2012, and insurance applications have to be in and the policy on cover before this date; any applications still in progress after this date will be assessed under the new rules. It would be prudent to get the process moving now to arrange cover. Applying for Life Insurance, Critical Illness Cover, and Income Protection is not normally a straightforward process.
You have to meet up with the IFA, complete the application forms, submit them to the insurer, and a doctor’s report or Nurse Examination may be required. The Doctor may hold onto the report for a month before returning it to the insurer. If the policy is put into a trust, you will need the Trustees to complete the Trust forms and return them to the insurer. Market conditions will also affect the application process, and the predicted rush of applications before the December 2012 deadline will slow down the processing of applications by insurers. It has been a couple of years since we bought in a specialist dental IFA, Dino Charalambous, to work with our clients, and we very quickly realised how much insurance and investment information was going under the radar. Information that was important and pertinent to our dental clients.
Likewise, sourcing insurance premiums has become more of a challenge, as whilst there are many more routes to secure premiums, how do you know the critical differences in the policies to cover you as a Dentist? Sometimes the cheapest quote is not the correct policy for your profession. And whilst we recognise that some people are driven purely by price and think that the cheapest premium is the best, or that all policies are the same, we would always encourage our clients to consider all options.
For example, policies taken out over the Internet are – EXECUTION ONLY – in other words, they are Non Advised (you chose the policy), so in the event of problems with a policy claim, you have no recourse to compensation, whereas with a Specialist Dental IFA, you would have a recourse to compensation by the Financial Services Compensation Scheme.
A Specialist Dental IFA will source and recommend an appropriate policy and make sure that you have the correct cover in place. An IFA will also advise you on putting the policy in a trust and Tax Planning advantages, an internet application will not provide any of this type of advice. When selecting an IFA for protection, you need to ensure that they have Whole of Market access for protection and not a Panel of Insurers. The difference between the two is that a Whole of Market Adviser can access the Whole of the Market for products, whereas an Adviser who has a Panel of Insurers may only be able to access 4 or 5 insurers. A Whole of Market access IFA will ensure that all the insurers have been researched and you have been presented with the best options for your situation.
*HMRC Consultation Document, Dec 2011: UK response to the 1 March European Court of Justice ruling that insurance benefits and premiums after 21 December 2012 should be gender-neutral. FTA Finance Ltd is an appointed representative of IN Partnership, the trading name of The On-Line Partnership Limited, which is authorised and regulated by the Financial Services Authority.
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