Gender does matter— especially when it comes to insurance. Whose rates are higher? And is it justified?
The process of determining premiums based on gender is known as gender rating, and it has its critics. Here are several examples of how gender impacts your insurance rates.
LIFE INSURANCE
Women’s life insurance rates are lower because they statistically live longer than men.
Since life insurance companies are concerned with insuring people who are going to live long and happy lives, the logic is that women pay premiums for far longer than men before the company has to make a payout. From the insurance company’s standpoint, men also have a tendency to delay seeing a doctor until a medical condition becomes a full-blown emergency, in addition to taking far more risks than women.
Life insurance is often based on gender, medical history, lifestyle and income status, but at least in one state, charging a policyholder more for coverage based on gender rating has been outlawed.
This has been a recent topic in the news involving Massachusetts-based life insurance company Savings Bank Life (SBLI). Because SBLI is state-chartered, it is the only company in the state that legally has to offer the same rates for both men and women.
As a result, Massachusetts state officials are at odds: some are fighting for gender equality and neutral premiums, while others say the equal rates are actually a disadvantage for women and the state of Massachusetts, because it causes women to choose out-of-state life insurers to find lower costs.
Robert K. Sheridan, president and chief executive officer of SBLI, wrote an editorial for the Boston Business Journal in that says this issue is not about gender equality at all. Instead, he wrote, SBLI should be allowed to “consider statistical mortality data related to gender just as they do about age, health history, and smoker versus non-smoker, when establishing premiums.”
The American Council of Life Insurers agrees.
“[With exception of Montana and SBLI in Massachusetts,] we are aware of no other state that has enacted a unisex law applicable to life insurance,” said Whit Cornman, spokesman for the American Council of Life Insurers. “This reflects lawmakers’ understanding of the need for insurers to be able to assess risk fully and fairly. Gender is one of many factors that life insurers consider when assessing risk.”
“We can’t predict what other states may do in the future, but we would oppose any proposals that jeopardize life insurers’ ability to underwrite fairly and properly,” Cornman said on behalf of ACLI.
