Gender Mind Bender
9 May 2012 | Protection Insight with Mark Jones, Head of Protection at LV=
As the clock ticks towards G Day on 21 December 2012, we will read more articles and headlines about the Gender Directive.
However, I fear that we can expect little coverage in the consumer press to highlight the issues and impacts on life, critical illness and income protection. It will be down to us – providers and advisers – to act as messengers.
What? More straight bananas?
The eye catching and humorous headlines of the popular press are set to lambast the alleged straight banana-like political correctness of Brussels Eurocrats and preposterously unfair price hikes for female drivers. Perhaps a sign of things to come, but only last week I read a ‘30-second guide to gender’ from one of the prominent fi nancial columns. It focused solely on car insurance, with only a footnote dedicated to ‘pensions’. Not even a whiff of the effects for life or health insurance. Sadly, we have to accept that life and heath insurance rarely make great headlines or good copy.
The I-E ninja
Depending on the contract type, and sometimes the person’s age (a key factor for critical illness), the Gender Directive changes will mean that men and women will pay less or more by as much as 20-30%. But those gains or losses are set to be largely exaggerated or offset by the silent stealth-like I-E taxation changes. The combined effect of Gender and I-E is that overall prices for life and critical illness are set to increase by around 10-15%. Whilst the I-E changes are set to follow Gender several days later from 1 January 2013, we can expect providers to make both sets of changes in one fell swoop.
It’s down to us to inform and encourage action. An opportunity.
So it’s down to us – providers and advisers – to make our customers and clients aware of the changes, what they might mean and what action people should or shouldn’t take.
But it’s far from bad news, I believe change does equal opportunity. For some, cover will never be as cheap, and if they act now they can beat the twin evil villains – the Taxman and the Eurocrats. I recognise price isn’t everything, but in these times of financial austerity, the ‘get a good bargain whilst stocks last’ angle can provide a powerful catalyst.
Not a lot in life is straightforward nowadays. So as a professional adviser, these legislative changes present a genuine opportunity to show your worth, display your expertise and add value. When reviewing your client bank and prospects, here are some of the factors and messages you might want to consider.
For existing clients with cover already in place
The Gender Directive ruling only applies to ‘new contracts’ concluded after 21 December. So, all existing contracts can continue on gender specifi c rates. However, the EU ruling was vague when it came to alterations or things like Guaranteed Insurability Options. Providers and the ABI have lobbied for clarity and we hope that common sense prevails when HMT delivers the UK legislation over the next few weeks or so.
A message to your existing clients is ‘If you’ve got cover already, don’t worry you’re safe. But if you want to change anything or increase your cover, let’s talk’.
For the waiverers, who didn’t take up your advice or recommendations
Not everyone you speak to takes you up on your recommendations. But the Gender changes open the door to getting back in touch and reigniting interest. Your message for waiverers is ‘If you’ve thought about cover but put it off (for whatever reason), it’s time to take another look. Don’t miss out… the clock is ticking.’
For those clients and prospects who don’t have protection, but who might need it
You may not have talked about protection with some of your existing clients. And there will be more prospects to meet over coming months. Gender (and I-E) is a great conversation piece to start exploring the need for protection. And your message to them? ‘If you haven’t really thought about cover for you or your partner, start now or miss out’.
When to start? Can’t wait, don’t wait.
With Gender, there will be no transition/ pipeline period. It’s not within our gift to do so, it is the law. Business that isn’t completed by 21 December will need to switch to a gender neutral rate. As the weeks and months pass towards G Day, there will be increasing pressures on providers to process and complete business before the hard stop on 21 December.
Wherever possible, get in early. As an adviser, you can help smooth and speed the journey for you and your clients (and for providers!). Consider your client’s medical and risk profile, opportunities to use tele-interviewing, non medical underwriting limits and GPR ratios. And remember where a GPR is required, we are all in the hands of the doctors.
In summary, it may be a case of straight bananas, but the Gender Directive (and I-E) represents a genuine opportunity to talk protection. A gender mind bender for sure, but one that can bear real fruit.
Mark Jones is Head of Protection at LV=. If you want to share your views on gender mind benders, straight bananas or advice opportunities, email him at Mark.Jones@LV.com.