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Why is life insurance more expensive for men than women?

Men generally pay higher life insurance premiums compared to women, and there’s a pretty straightforward reason why: it all comes down to risk. Insurance premiums are calculated based on several variables including age, gender, family and personal medical history, profession, where you live, habits like smoking and drinking, and other lifestyle factors. Life insurance premiums can be cheaper for women for two reasons: they live longer, and they’re considered lower risk.

Age and lifespan

When pricing life insurance policies, one consideration for insurers is life expectancy. Women tend to live slightly longer: the current average lifespan for women in Canada is 84 years, compared to 80 for men. Because life insurance companies are more likely to have to pay out claims to men sooner, they pay higher premiums to account for the higher risk.

There are a few things that account for the differences in life spans. Professions that are considered more dangerous tend to be male-dominated (police, firefighters, construction workers, pilots, miners, loggers, fishers and trappers, farmers and agricultural workers). Men are also more likely to engage in risky hobbies or activities, such as skydiving, scuba diving, base jumping and car racing.

In Canada, men also face higher rates of suicide and incarceration compared to women. Earlier this year, Statistics Canada reported the ongoing opioid crisis is a “major contributing factor” to Canada’s life expectancy stalling in 2016-17, with men ages 20 to 44 dying at a faster rate. They’re also considered riskier drivers; more men die in car accidents than women, and men pay more for car insurance.

Insurance is all about calculating risk, so insurers take factors like these into account using historical data and actuarial tables to calculate risk levels and set rates.

Of course, this may not seem fair to the millions of individuals who present a lower risk than their demographic as a whole. It also doesn’t mean that women don’t work in dangerous professions or participate in risky activities or behaviours—it’s just that men are more likely to, and therefore are more likely to die early, accidentally or unexpectedly. Keep in mind that life insurance also takes into account several individual factors, such as age, health and habits. Gender is just one factor—overall, higher risk equals higher insurance premiums, and lower risk equals lower premiums.

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Comparing life insurance premiums for men and women

Here’s an example of the difference in monthly life insurance premiums using quotes on 10-year term policies with $1 million in coverage from Sun Life, one of Canada’s major insurers. In this example, both are non-smokers from Ontario. These quotes don’t include accidental death insurance or critical illness insurance, which can be added at an extra cost. Here are the monthly premium quotes (before tax) for men and women at the ages of 30, 45 and 60:

These basic quotes are for illustrative purposes, and assume similar health profiles. Life insurance applicants will have to complete a medical exam and questionnaire that includes questions about recent weight loss, illegal and prescription drug use, treatment or counselling for substance use, and history of or ongoing treatment for diseases, illnesses and disorders, including mental illnesses. But based on the quotes above, a woman will pay 21% less at age 30 compared to a man, 23% less at age 45, and 34% less at age 60. Premiums will change based on the type and length of policy, the amount of coverage, smoking status and other individual factors.

How transitioning affects life insurance

Canadian insurance companies are beginning to develop policies and procedures around how to classify transgender applicants and existing plan members who transition. With no industry-wide regulations, it really depends on the insurer. Some allow people to apply based on gender identity, while others require applicants to be classified by sex assigned at birth. Some may take note of both, or allow customers to register as non-binary. Online insurance quote forms may be simplistic and not account for these nuances, so you may have to contact an insurance broker or company directly to see what their policies are. 

Being transgender in itself isn’t considered a risk factor that would increase premiums. Like all applicants, risk level is assessed based on individual medical profile, including personal and family medical history, and other lifestyle factors. In general, undergoing major medical procedures, or a diagnosis of depression (including postpartum depression), anxiety or other mental health issues, could mean higher rates.

For existing policyholders who transition, individuals on private plans can contact their insurer directly to inform them of their gender and legal name change, while those who are part of group benefit plans should inform their plan administrator (usually the HR department), who will then contact the insurer. Insurers may require documentation, such as government ID verifying new legal name and gender, or a doctor’s letter. 

The bottom line

Life insurance is a necessity to ensure the financial wellbeing of your dependents after you die, or can be used to offset funeral expenses, pay off debt, or to settle tax obligations. At the end of the day, life insurance is very personal, and premiums will depend on an assessment of individual risk factors—how insurers assess risk for men vs. women is just one aspect. To get the best coverage for your needs, you can compare life insurance quotes to find out what type of plan works for you and how much coverage you need.

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