Women’s Life insurance to rise by 30%.

3/24/2011 7:05 AM EST

George Osborne’s March 2011 budget suggests switching life insurance business from the ‘I minus E' tax regime will lead to premium increases.

The move follows the recent European Court of Justice ruling on gender is also likely to push premiums up and now this change in the tax status looks to make a bad situation 30% worse for women buying life insurance.

Of course it heaps problems onto people. Life insurance is still huge and families need to accommodate the loss of a breadwinner or house maker when looking at the household budget. With house buying being given a boost in the budget, this is likely to bump up the ancillary costs around a mortgage.

Some insurance companies are pointing to the potential for extra revenue for intermediaries and suggesting that it creates a level playing field for consumers that, strictly speaking, is fairer. However, dissenting voices are saying that a higher life insurance premium is not good for consumers and ultimately not good for business.

David Yates, Head of Marketing at Contact Insurance commented " Is this really good for consumers?

If the price of life insurance rises for everybody, it might seem to be good for insurers and brokers on commission, but a higher premium is not good for consumers. If the law has changed we have to get on with that, but I think it is short-sighted to be looking at this as an opportunity to increase revenue on the back of it. Ultimately it will drive people away from life insurance, which is irresponsible in the extreme."

The Treasury's budget document said: "The government will introduce legislation to remove life insurance business from the income minus expenses life tax system designed to tax investment type business and align it with the tax treatment of other trading entities."

The reclassification is scheduled for January 1 2013.