I work in annuity pricing (pretty new in my career though, so I could be wrong), and if we were pricing the product, I think that the net effect wouldn't necessarily be wholly higher prices for annuities/life insurance, despite using the higher of the two rate tables. We price our products so that they all have the same ROI, so if we had to use male mortality for life insurance and female mortality for annuities (thus increasing our ROI), to make up the reduced expense from mortality, we'd make it up by increasing interest credited in the annuity case, or decreasing the cost of insurance in the life insurance case.

There would generally be more variance in mortality income, but I think that the net effect would be pretty small to both the insurer and the consumer.

Women would be paying more for life insurance than they "should" be (relative to men--men would be paying less than they "should" be), and men would be paying more for annuities than they "should" be (and again, vice versa).