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Health insurance for older people

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The new age laws

The Equality Act 2010 banning unjustifiable age discrimination in the provision of goods and services comes into effect from April 2012.


The law will make it unlawful to unfairly discriminate against someone because of their age when providing insurance.


Insurance companies will still be allowed to use age when assessing risk and deciding prices.


But insurers will have to base such decisions on reliable evidence rather than simply imposing a blanket ban.


Insurers will also have to help people find an alternative provider if they are unable to provide cover for age-related reasons.


Insurers argue that they are not prejudiced, but older people have more claims. What will probably become subject to legal challenge is whether insurers can use their own claims experience or aggregate market statistics to justify refusal to offer cover or restricted terms or higher prices. As many insurers have historically refused to offer cover for older customers, few have their own adequate statistics.


Insurers will be able to continue to use age as a determinative risk factor when it is reasonable to do so. Current agreements with the previous government allowing insurance companies to discriminate on age uses the basis of “may reflect their own data when pricing their policies providing this data is published independently or included in an industry aggregate”. The current government draft wording for the exemption is tighter. Discrimination on the grounds of age must be carried out by reference to information, which is relevant to the assessment and from a source on which it is reasonable to rely. 


At present we do not have a final wording for the new law, but even when we have, it is very likely that there will be uncertainty on how it works on health insurance.


The argument will be on the definitions of relevant and reliable source. The government has confirmed that arbitrary risk assessments based on age will be open to challenge. They also intend to ask insurer trade body ABI to publish aggregate data for the industry as a whole, which will show how statistics based on age can be used to rate insurance and this information must be publicly available. It is widely acknowledged that current market statistics on age and insurance are out dated and arguably unreliable.


While health insurance has been moving away from having upper age limits, several insurers still have age limits of 65.This is going to be a problem with the ending of compulsory retirement, let alone the new equality laws.


Whether or not insurers can still offer specialist policies for older people is not yet clear.


Working longer and in later years

Research by Friends Provident suggests that as many as a quarter of the workforce plans to work beyond 70. Friends Provident: Visions of Britain 2020, found that 40% of those surveyed said they plan to work past the age of 70.


With the end of compulsory retirement, companies can no longer assume that their employees will retire at all, let alone at set ages.


It used to be simple, most men retired at 65 and women at 60. These ages date back to when people expected about five years in retirement, but now many live into their late seventies and early eighties. Some people spend more years retired than they worked.


Changes to the default retirement laws

From 1 October 2011 older workers are protected from employers who want to fire them because they think they are too old.


The Default Retirement Age (DRA) which gave employers the right to sack staff age 65 and over - purely because of their age - has been abolished.


This means that with a few exceptions, you can choose when to retire.


State pension age

The government is increasing the ages that people begin getting a state pension. You do not have to retire at your state pension age.


Currently, the age for men is 65, and for women it is 60.


For women the age will increase to 65 between April 2016 and November 2018.


From December 2018 the age for both men and women will start to increase to reach 66 by April 2020.


The age for both men and women will be 66 by April 2020.


Current plans are for this to increase to 67 from 2036 and 68 by 2046.However, the government is considering how the age should be changed in the future. This may mean the timetable for increases to 67 and 68 will be brought forward proposals in due course. These proposed changes are not yet law and still require the approval of Parliament.


Effect on insurance

What these legal and practical changes will mean is that insurance designed to end at a fixed retirement age of 60 or 65 is out of date.


Simply, insurers can no longer assume that people below a set age do not need certain insurances, as they are not working.


The new rules should make insurers change their attitudes to the maximum age they accept people for insurance –but it may be a slow process to get some insurers away from the idea that everyone suddenly retires and/or becomes less healthy at 65.


Views differ, but a general feeling is that most of us will work full time until 70, and part-time for 5 or 10 years after that.


With people living longer, most of us simply cannot afford to spend more years retired than in work.


How quickly and how insurers will adapt to the new laws on gender and age discrimination, and changing retirement ages, is unknown.

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