Financial Planning and Life Insurance - Ruling by ECJ

You will probably have heard of the recent ruling by the European Court of Justice, which will now change the law on how some insurance and pension products are structured. The case will result in major changes in how certain forms of insurance and retirement annuities will be charged, and will affect you.

What the ECJ case was about

The ruling focused on the perceived sex discrimination that exists when using gender to determine the costs for insurance and pension incomes. Presently, insurers are permitted to use the differences between the sexes to charge different rates for their products according to the risks presented. This means that some forms of insurance are cheaper for women, and others for men. From the end of 2012 insurers will no longer be permitted to charge rates separately for men and women.

On the face of it this would seem fair. However, this does miss the point of insurance. Insurance is determined on the risk of an event happening. If you are not able to take an element of the risk into your calculation this might not be to the benefit of everyone.

Unfortunately, this might not result in you getting cheaper premiums on your insurance; in fact insurers might keep the prices the same for the more expensive groups and put up the price for the previously cheaper groups. Insurers are naturally cautious; if they don't know if a risk is male or female then they might assume the worst case scenario. There may be ways around this, perhaps with individual underwriting.

How will the ECJ ruling affect your insurance and pensions?

Car insurance

At the moment women get cheaper car insurance than men, since in general they drive more safely and have less expensive accidents. From 2013 the premiums will be the same for both sexes. The ruling probably means that your car insurance costs will increase if you are a woman.

Life Insurance

At the moment women get cheaper life insurance than men, since they live longer on average. From 2013 the premiums will be the same for both sexes. The ruling probably means that your life insurance costs will increase if you are a woman.

At the moment men get cheaper income protection insurance than women, since they are less likely to get sick than women on average. From 2013 the premiums will be the same for both sexes. The ruling probably means that your income protection insurance costs will increase if you are a man.

Critical illness insurance

At the moment men get cheaper critical illness insurance than women, since they are less likely to get sick than women on average. From 2013 the premiums will be the same for both sexes. The ruling probably means that your critical illness insurance costs will increase if you are a man.

Retirement income (annuities)

Since women live longer on average than men, they tend to receive lower retirement incomes with the same pension funds than men. This is because the same retirement fund must be spread out over a longer period, meaning the income is lower. After 2012 the incomes will need to be equalised, but the result might not be that women get a boost; perhaps men will lose out.

What does the ECJ ruling mean for your financial planning?

Well, you must shop around for the best deal. Do not assume that your current insurer or pension provider will offer you the best deal, since standard rates will probably suffer. It will become more important to compare products after 2012.

Dan Woodruff is a Certified Financial Planner based in Colchester, Essex, UK. He regularly writes articles on financial planning and investment management aimed at UK business owners and investors. Go to http://www.woodruff-fp.co.uk to find more content, or sign up for his free newsletter or financial planning blog.

Woodruff Financial Planning is authorised and regulated by the Financial Services Authority.

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Best Car Insurance - 3 Tips For Finding Your Best Deal

Shopping for the best car insurance? Sure, price is certainly an important factor to consider. But what else should you keep in mind as you shop? Take a moment to review three small steps that will insure you are getting both the cheapest and the best car insurance.

1. If you haven't shopped for car insurance in awhile, start by getting quotes from at least five different companies. While this step used to involve hours on the phone while you shopped local agents, you can now use an internet-based quote provider to supply fast multiple insurance quotes from major national insurance companies.

2. Once you have your car insurance quotes in hand, it is time to research the business reputation of the companies you are considering. The best way to do this is by visiting the website for the department of insurance in your state. Most departments have websites and many will publish the consumer complaint ratios for all of the insurance companies that sell insurance in your state. This ratio tells you how many complaints have been received by a car insurance company for each 1,000 claims filed.

If your state does not publish a complaint ratio, try checking nearby states to see if they publish this information. While an insurance company may have varying practices in different states, checking its reputation in neighboring states will give you a feel for the general reputation of the company. If they are getting a lot of complaints in other states, there is a good chance you can expect the same customer service in your own state.

3. You are not quite finished! Now it is time to consider the financial strength of the insurance companies you are considering. As recent economic events have shown, even the largest companies may have weak financial fundamentals. The best way to research the financial strength of a company is to check its ratings at A.M. Best and Standard & Poor. These two companies publish financial ratings for all of the insurance companies. Why is this important to you? Because the financial strength of the insurance company will determine its ability to pay out claims. Which is the only reason you buy car insurance in the first place!

A.M. Best will rate each company with a letter grade from A++ (the highest) to E. An F means the company is in liquidation and S means it has been suspended. You are only interested in companies with at least a B+ rating.

Standard & Poor rates companies from AAA (the highest) to CC. Avoid any company with a rating of R (under regulatory supervision) or NR (not rated). Consider only those companies with at least a BBB rating.

Yes, it is a little extra time and effort to research the customer service and financial ratings of the car insurance companies you are considering. But all of the research can be done on your computer in less than an hour. In the end, you can relax, knowing that you found not only the cheapest car insurance, but truly the best car insurance.

For more tips on finding the best car insurance [http://www.shop-car-insurance.com/5.html], please visit the website recommended below.

Barb Dearing is a freelance writer, specializing in topics that help consumers save money in a variety of areas. She recommends the following quote service for consumers seeking multiple car insurance quotes: http://www.shop-car-insurance.com

Article Source: http://EzineArticles.com/?expert=Barbara_Dearing

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