On average men tend to live shorter lives than women.
This leads to insurance firms charging men higher life assurance premiums but on the flip side granting them higher annuity rates; this resulting in higher pension amounts than that paid for a women of the same age with the same value pension fund.
You might agree with me (or you might not) that the different pricing for men and women is fair.
After all insurance companies need to take into account all material facts in order to determine a fair price for their product offerings.
Some of those material facts are based on widely available statistics and some of the material facts come from the answers that we give on the proposal forms we complete (you should always disclose material facts to prevent any insurance you apply for becoming invalid).
So you may be surprised to learn that the European Court of Justice is expected to rule shortly that insurance firms will be acting illegally because they provide higher annuity rates for men than they do for women.
Their view is that the use of gender to calculate annuity rates is illegal because it discriminates by sex.
I am pretty sure that this has been tested before in English Law Courts but hey we don’t rule ourselves any more do we?!
So if this ruling happens expect annuity rates for men to fall.
If you thought that maybe annuity rates for women would rise after this ruling please do not hold your breath!
Photo credit: Flickr/ReindeR Rustema
