Can identifying as another gender save you money on your insurance premiums?

Oct 30, 2019

Welcome to Finance and Fury, The Say What Wednesday Edition

This week question comes from Matt -

Not so sure if this is your area of expertise or have come across this at all, although I have a question regarding insurance and identification of gender. People know that gender affects the price of insurance premiums paid and can save a significant amount if one were to identify as a female for insurance to pay less, would this be legal or do insurance companies have a way around this.

Cheers – from Matt,

Thanks for getting in touch. That is an awesome question!

1. Actually, laughed out loud when this came through – very interesting point –
   1. Especially if someone does identify as another gender
2. Today’s episode -
3. Talk about disclosure requirements and pricing between male and females –
   1. Different genders pay different amounts for the types of covers

 

Disclosure requirements - Under current insurance legislation – non-disclosure

1. Insurance companies only offer the options of male or female for the applications, which often is confirmed in the medical underwriting process
   1. No other when looking at actuary - a professional who deals with the measurement and management of risk and uncertainty
2. Statistics are what insurance companies work with – based in reality and stats on claim history
   1. Interesting issue – people identifying as new genders
   2. Contacted underwires – will look at covers – but assess as biological – not what is identified as
   3. The underwriters would need medical assessments -makes it much harder to get
3. If the incorrect gender does slip through the application process, Insurance companies would likely be able to get out of paying a claim due to 'non-disclosure'. I.e. saying you are a female when actually you are a male would give the insurance companies an out from making any payment.

 

Premiums for genders –

1. Premiums differ for a number of reasons – but all comes down to chance to claim
   1. Ages – really young – slightly higher, about 25-35 cheaper – then after 35 goes up more
   2. Occupations – low-risk office jobs, versus underground mining
   3. Health factors – smoking, pre-existing conditions –
      1. Smoking likely 50% more in most cases
   4. Genders – different genders claim on different covers
2. The Income protection premiums are higher for females while Life cover premiums are higher for males,
   1. There is no clear winner in gender when it comes to overall, who pays the least amount – depends on the level of covers and types of covers

 

Run quotes

– two people Aged 40 – working in office admin job – same incomes $80k

1. Life - $500k – More expensive for males = 32% more
   1. Male – $254
   2. Female - $192
2. TPD - $500k – About the same
   1. Female - $192
   2. Male - $192
3. Income Protection - $5,000 per month – more expensive for females = 56% more
   1. Male – $1,164 + 111 = $1,275
   2. Female - $1,816 +170 = $1,986
4. Trauma - $200k – More expensive for females = 12% more
   1. Male – $610
   2. Female - $684
5. Totals - $2,475 p.a. for male and $3,206 p.a. for females – due to claims history and likelihood to claim

 

Depending on if you need more Life – the female is cheaper, if you are male, IP is cheaper – but have to disclosure biological gender – assessment is based around this and underwriters would write off to doctors

1. If you don’t give real gender – it will likely create a reason for insurance companies to get out of paying out

 

Thanks again for the great question. If you want to have a question answered visit https://financeandfury.com.au/contact/