How can a gay man get insured?

Only with difficulty, if he is honest about his lifestyle - though some companies are sympathetic, reports Iain Morse

Glad to be gay? Maybe not, if you're looking for life insurance. If they are able to obtain cover at all, gay people are likely to find themselves paying far higher premiums on their policies than their straight counterparts.

Last week Virgin Direct and Direct Line were asked to quote for life cover for two men, identical in every respect, except for their declared sexual preference.

The premiums quoted in our table show how much extra gay men may have to pay for life insurance.

Ivan Massow, an independent financial adviser (IFA) who specialises in financial services for the gay community, points out: "This is typical. Gay men are seen as bad risks for HIV and Aids, regardless of individual lifestyle.

"Insurance companies will quote for gay men, then ask for a full medical examination. Usually premiums go sky high when they come to make a final offer. In my experience, some gay men are deterred from even trying to buy insurance as a result of this."

Yet obtaining life insurance can be vital. Mortgage lenders, for example, will look for a combination of life cover with many endowment-style savings schemes, where any life cover is sufficient to pay off the loan if the borrower dies before the plan matures.

Sole traders, partners and directors in small businesses may also be asked by a bank to arrange cover adequate to meet an overdraft and other trading liabilities.

All insurers now include both health and lifestyle questions in any application for life insurance that identifies a gay applicant. One option is to answer these questions dishonestly, but this may void the policy if a claim is made, even where the cause of death is unrelated to HIV or Aids.

Many insurers blame the high cost and difficulty of cover for gay men on specialist reinsurance companies which they use to lay off the risks that they sometimes take on. When a life insurance policy is arranged, only part of the amount payable on death will be payable by the insurance company if a claim is made. The remainder will be passed on to a reinsurer such as Munich-Re which, for instance, covers both Virgin and Direct Line.

Martin Campbell, marketing manager at Virgin Direct, explains: "Reinsurers play a key role in determining the rates charged, because they keep actuarial data on mortality rates. There is no fear factor or prejudice included in this."

Graham Austin, an underwriter at Munich-Re, adds: "The industry is more relaxed now than 10 years ago about insuring gay men: then Aids was an unknown risk; now we have real statistics."

These can seem stark: of about 12,300 men in the UK with Aids, some 9,780 were infected through sex with other men. For HIV, the number of those affected is 24,050 or so, with about 17,290 infected in the same way.

Despite this, rates for gay men have been falling. Direct Line estimates that there has been a reduction in its premium levels of about 30 per cent in the last 12 months. Even Munich-Re believes there are grounds for cautious optimism in the longer term. Graham Austin adds: "The late Eighties Doomsday scenario has not been met. Current infection rates are below the lowest estimates from that period."

But this response to new statistics on HIV/Aids is not shared by all. Zurich Life, for example, simply declines all gay applicants for life cover. John Ravenscroft, who markets their life products, is uncompromising. "We just are not interested."

And if gay men are in a stable relationship, testing negative for HIV? "How do you prove it?"

Direct Line and Virgin Direct say that they may be prepared to take account of stable relationships in their underwriting, and that this factor may reduce premiums. Munich Re is less certain, simply because the numbers of gay men involved are such a small fraction of the total population that it is difficult to compile meaningful statistics.

The process of finding insurance can be traumatic for a gay man. An HIV test is mandatory. An insurer can decline to provide cover even if the test is negative, without giving any reason. Going to a sympathetic IFA may ease the trauma.

Ivan Massow's firm deals with a number of firms that are prepared to be more sympathetic towards gay men. But he warns: "They want the business, but not the name for it. They don't want to open the floodgates, and are still nervous about the reactions of boards and shareholders".

Ivan Massow: 0171-631 1111 (with other branches in the UK).

Virgin Direct Heterosexual Homosexual

pounds 100,000 pounds 16.42 pounds 67.39

pounds 200,000 pounds 30.21 pounds 131.18

Direct Line

pounds 100,000 pounds 15.09 pounds 39.97

pounds 200,000 pounds 28.18 pounds 77.74

Policy term 30 years, premiums monthly,

for a male non-smoker aged 30 next birthday

"In February 1992, I took a home improvement loan with the Bank of Scotland for pounds 34,000. I was told to take cover with Standard Life. But after they saw my medical records, I was declined with a two-year review period. The bank found another insurer, General Accident, to provide cover. I arranged a monthly direct debit.

In 1995, the bank questioned whether I had any cover, denying knowledge of the existing policy and sending me back to Standard Life. I then learned that they had a tied relationship with Standard. I tried to point out that Standard Life would not insure a gay man, but the bank insisted. I completed an application and went for my medical.

At the medical, I was honest about being gay, and that I'd never taken an HIV test. They asked for access to my medical records, which I also inspected. The only note referring to my being gay dated back to 1962, when I asked for mild anti-depressants while first coming out to friends. This was the basis for my first rejection by Standard Life.

They now declined my new application. But I was not informed of this in writing, only verbally. No reason was given. Meanwhile, I had cancelled my direct debit to General Accident, under the impression that this policy was not acceptable to the bank.

A very difficult period followed, as I asked the bank not to send me back to Standard Life again, but to accept the policy with GA, whom I persuaded to let me restart payments and pay off any arrears, and confirm this in writing. After several months they finally did so. In the meantime, I was haunted by the fear that they might say I'd broken the terms of the loan and ask for repayment.

From start to finish, this was an ordeal. I was pressured to go back to Standard Life. I was left to wonder if they knew something about my health which I did not. The bank was evasive, and kept claiming to have lost records."

Standard Life and Bank of Scotland both said they would not comment on individual cases. John Gibb, Standard Life's chief underwriter, says: "We are happy to look at gay men in low-risk groups, celibate or in long- term relationships. HIV tests are mandatory."