Life expectancy statistics are one of the key resources used by insurance companies in calculating premiums for life insurance. Traditionally, women have benefited from lower premiums due to their propensity to live longer than men.
However, latest figures from the US reveal that the gap between the life expectancies of men and women is closing, as a result of lifestyle changes over the past few decades. Although life expectancy continues to rise for both men and women, the increase has been greater for men due to improvements in their health, while it has slowed down for women who have seen an increase in female medical problems over the same period. Women are now experiencing higher rates of heart disease and lung cancer than ever before, while deaths from the most common causes for males, including lung cancer, have been declining.
In the US, data from Credit Suisse First Boston's "Longevity Index", used by the insurance industry to calculate premiums, shows that males in the US can now expect to live to 78.1 years, while US women have a life expectancy of 82.6 years. Life expectancies for men have improved by 2% over the past ten years, compared with an increase of only 0.95% for women. In Australia, people are living even longer, an average of 80.8 years for men and 84.7 years for women.
It is not yet clear what the effects on insurance premiums will be. Premiums may rise steeply for both men and women as life expectancies continue to improve, to cover the additional costs to insurance companies of making payments over longer periods of time. Alternatively, women may continue to benefit from lower premiums if the differences in life expectancy widen again, as women make changes to their lifestyles in response to such health concerns.
When taking out life insurance, you are more likely to be offered lower premiums if you are a non-smoker, and if your medical examination results demonstrate that you have a healthy lifestyle. You should also consider which type of insurance is most suitable for your circumstances: a whole-life or term policy, income protection or critical illness cover, since costs vary considerably.