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Leveling the Playing Field Still Manages to Leave it Tilted

Insurance Agent Insurance premiums have always been established by accountants using statistical data accumulated over many years. Primary ingredients in the mix are: age, gender, interest earning assumptions, risk to be assumed, length of time the insurer stays at risk and a few others.

However, recently in the EU, the European Court of Justice ruled that sex can no longer be used as a factor in setting insurance premiums (the actual amount of money charged by insurance companies for active coverage.)

Statistically, women live longer, on average, than men and they have fewer car accident claims (live with it, guys), just to name a couple factors. The end result is lower life and car insurance premium rates for women compared to men of the same age. On the flip side, because of their superior longevity, women receive lower periodic income payments from an annuity than men of the same age, paying the same purchase price, all other things being equal. In the end, both receive the same total payout, with women receiving lower periodic payments for a longer period of time than men.

When compared to women, men statistically have fewer days during their business or professional careers when they can’t work because of sickness or accidental injuries. Because of this statistic, men usually pay lower premiums for income replacement insurance than women.

Women statistically experience higher health care expenses than men until their mid-40s, at which point men replace women on the graph. So, young men pay lower health insurance premiums than young women; then the tables turn as men reach middle age. Favoring one sex over the other hasn’t been a consideration in setting insurance premiums in the past. It all depends on how the numbers fall out. Now in the EU, the court decided that the statistics just aren’t “fair.” By tossing sex as an element in premium calculation, the court has guaranteed equal discrimination against both sexes. EU now stands for “Egalitarianism are Us.”

Ken Smith is a Life & Health Insurance Independent Broker at Kenneth L Smith, CLU, FLMI in Jacksonville. He can be reached at (904) 273-5704 or KSmith6288@aol.com.