How Does Gender Affect Life Insurance Premiums?
By law, insurance companies aren’t allowed to discriminate by race or religion, but the gender of the insured may affect the insurance premium, which varies by state. For example, Montana’s rules on gender are closer to those of the European Union (EU), which prohibits using gender as a factor when setting auto, health, or life insurance premiums.
Insurers in other states often use gender life expectancy as a variable in calculating premiums. Those expectancy numbers may be defined in the “What is life insurance?” section of the insurance company’s website. The life expectancy of women is roughly 80 years, while men are expected to live 75 years. That disparity is the reason for different rates.
Gender-specific versus gender-neutral pricing
Insurance companies in most of the United States use actuarial tables to measure the life expectancy of men and women. Those tables track historical data showing that women live longer than men. A shorter lifespan translates into a higher risk to insurance companies, so they charge a higher premium. That’s called gender-specific pricing.
Gender-neutral pricing is what’s used in the European Union. Men and women both pay the same rate. That seems fair to the insured, but it doesn’t change the life expectancy rates, meaning that women are paying more than they should and men are paying less. Insurance companies risk overpaying benefits if they don’t raise rates.
Life insurance for transgender and non-binary
Being asked to select either “male” or “female” on a life insurance application can be challenging for someone going through a sexual reassignment procedure or individuals who identify as non-binary. That’s not an issue with gender-neutral pricing. It is with the gender-specific pricing models that are used throughout most of the country.
Individuals going through a reassignment procedure may be required to wait until the process is complete before being approved for life insurance. Most insurance companies won’t deny that coverage, but premiums might be set higher due to potential complications of the surgical procedure. This is based on medical data gathered from previous procedures.
Gender-specific health conditions
Men don’t get pregnant, and women don’t get prostate cancer. Some gender-specific health conditions will be factored into the life insurance premium. Insurance companies may require a life insurance applicant to submit to a medical exam to assess the risk of those conditions. This could be based on personal experience or family medical history.
One example is hereditary conditions specific to males or females in the applicant’s family. A history of breast cancer or ovarian cancer in women could be considered a risk factor. Diabetes and high blood pressure could be inherited too, but they are not gender specific. Insurance underwriters look at both when setting rates.
Gender is not grounds for approval or denial
It is illegal in the United States for an insurance company to base the approval or denial of life insurance on gender. That applies to men, women, transgender, and non-binary. The current system only allows the insurer to set rates based on gender. To learn more about this, visit your local insurer’s website or speak with a registered insurance agent.