Demi
Wed, Feb-20-08, 03:15
The Telegraph
London, UK
20 February, 2008
Shed the pounds from your life cover
Britain's obesity epidemic is causing life insurance premiums to soar, says Teresa Hunter. But don't despair – adopt a few simple steps towards healthy living such as spending some time in the gym and you'll find it easy to reduce your life cover
The price of life insurance will increase by 20 per cent across the board because of Britain's ballooning waistlines, while certain individuals may see premiums rise by 50 per cent if they fail the obesity test.
Recent revelations that more than a million people are taking tablets to fight obesity, which now affects one in five men and nearly a quarter of women, are forcing insurers to rethink what they charge us for life cover.
In the late 1980s premiums tripled in the face of the Aids epidemic that never materialised. Those increases have since unravelled, to the point where basic life insurance is cheaper than ever. Now insurers are itching to push prices up again, this time using weight as an excuse.
Most basic life cover is taken out to protect a mortgage and is therefore bought by relatively young people, very few of whom die over the 25-year term. As a result, selling it is already a profitable business. Only 17 25-year-olds, 24 30-year-olds and 39 35-year-olds out of every 1,000 will die within 25 years, and these numbers are falling further following the decline in smoking.
Insurers increasingly use the "body mass index" (BMI) to decide how much individuals should pay for their cover. You calculate your BMI by dividing your weight in kilograms by your height in meters. This can easily be done online at websites such as NHS Direct.
Insurers used to increase premiums only if the BMI reached 40, but the threshold can now be as low as 29. So, under the new approach, a 5ft 7in tall woman weighing 13st 1lb (183lb) (a BMI of 30) would face higher premiums. Legal & General starts to increase premiums once the BMI reaches 30. Norwich Union, Aegon and Friends Provident typically add 50 per cent to the cost once the BMI reaches 32 to 35.
Any kind of BMI penalty would push up the bill for basic life cover by around £200 a year for an otherwise healthy 40-year-old couple wanting to protect a £200,000 mortgage. For example, the most competitive companies, including Aegon, Norwich Union and Legal & General, charge around £36 a month for a joint policy (one that pays out on the first death only).
Aegon would typically charge the couple £440.28, according to moneysupermarket.com, the price comparison service, and Legal & General £423.24. If the applicants were overweight but without any other health problems, however, the cost could rise to £635 at L&G and £660.42 at Aegon. At age 45, the overweight penalty jumps to £324 annually, pushing the overall bill to about £1,000 a year.
In some ways single people are even more heavily penalised. A single person could be charged an extra £132 or more annually, even at the most keenly priced companies, if their BMI set insurers' antennae twitching. They could be stung by an extra £198 at the age of 45.
Kevin Carr of LifeSearch, the specialist financial adviser, says that behind the scenes companies will raise premiums sooner and more dramatically than they admit publicly, with customers being asked to pay more when the BMI has touched just 27.
"Every application is different. But certainly we see premiums increased at a BMI of 27. In general, the cheaper the premium, the sooner it is raised because of weight," says Carr. "That's why it is always important to shop around for cover and not be lured by the best-buy premiums. The chances are you may not get them, and you may actually do better with a company that isn't in the best-buy tables, because it doesn't penalise the overweight so aggressively."
It is vital to be honest about your height and weight when applying for insurance. The Financial Ombudsman Service is seeing more claims refused because incorrect details were given. A spokeswoman for the Ombudsman says each case is treated on its merits. However, the signs are that the adjudicator is taking a reasonably hard line.
For example, it recently rejected a complaint following the death from a blood clot of a 37-year-old man who had stated on his insurance form that he was 6 feet tall and weighed 16 stone (224lb) when his height at death was 5 feet 9 and he weighed 20 stone (280lb).
The Ombudsman sided with the insurer on the grounds that the applicant could not honestly have thought he weighed only 16 stone when he applied for the policy. We may all soon be forced to share the bill for piling on the pounds as insurers become increasingly alarmed at our burgeoning backsides.
"We are seeing weight go up across the entire population. This may force us to stop looking at the issue as an individual problem but as a problem for the whole nation, and premiums may have to rise across the board," says Matt Rann, the head of underwriting at Aegon.
This view is echoed by Michael White, Norwich Union's chief underwriter, who adds: "If the [population] as a whole is becoming more overweight, this will have an effect on general premiums. Insurers are keeping a close eye on all available government, medical and academic evidence, as well as their own claims experience."
Yet some recent academic reports have questioned whether being overweight does indeed reduce life expectancy in the absence of other health problems such as diabetes or high blood pressure. Simon Capewell, professor of clinical epidemiology at the University of Liverpool, is sceptical about some of the claims about weight, particularly at younger ages. He describes the risk of anyone aged up to 45 dying prematurely because they are overweight as "almost non-existent".
He says: "If they are the kind of obese people we see on television, where they need two beds to sleep in and a crane to lift them off, then of course there are health risks. But being a bit cuddly is not going to kill you.
"It is true that this picture changes later in life at 65 or 75, but even then it is a pretty modest risk. Smoking is the big killer. It doubles your likelihood of dying at any age." A paper from Heriot-Watt University for the Faculty of Actuaries also questioned the automatic assumption that the overweight die young. But the paper doesn't cut much ice with insurers, so we all have another reason to stay fit and healthy.
BEAT THE PREMIUM SQUEEZE
Always give accurate details of your height, weight and any other medical history, or risk claims being rejected.
If you are charged more for being overweight when you are otherwise healthy, ask your doctor to write a note to the insurer.
Supply alternative data, such as hip to waist ratio, which can point to good health and challenge weight assumptions.
There may be reasons why you are heavy. Athletes, for example, carry more muscle. Point this out to the insurer.
Shop around aggressively. Seemingly cheap insurers are quicker to raise premiums for the overweight than those that seem more expensive. Getting those keen prices can prove difficult.
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/02/19/cmobese19.xml
London, UK
20 February, 2008
Shed the pounds from your life cover
Britain's obesity epidemic is causing life insurance premiums to soar, says Teresa Hunter. But don't despair – adopt a few simple steps towards healthy living such as spending some time in the gym and you'll find it easy to reduce your life cover
The price of life insurance will increase by 20 per cent across the board because of Britain's ballooning waistlines, while certain individuals may see premiums rise by 50 per cent if they fail the obesity test.
Recent revelations that more than a million people are taking tablets to fight obesity, which now affects one in five men and nearly a quarter of women, are forcing insurers to rethink what they charge us for life cover.
In the late 1980s premiums tripled in the face of the Aids epidemic that never materialised. Those increases have since unravelled, to the point where basic life insurance is cheaper than ever. Now insurers are itching to push prices up again, this time using weight as an excuse.
Most basic life cover is taken out to protect a mortgage and is therefore bought by relatively young people, very few of whom die over the 25-year term. As a result, selling it is already a profitable business. Only 17 25-year-olds, 24 30-year-olds and 39 35-year-olds out of every 1,000 will die within 25 years, and these numbers are falling further following the decline in smoking.
Insurers increasingly use the "body mass index" (BMI) to decide how much individuals should pay for their cover. You calculate your BMI by dividing your weight in kilograms by your height in meters. This can easily be done online at websites such as NHS Direct.
Insurers used to increase premiums only if the BMI reached 40, but the threshold can now be as low as 29. So, under the new approach, a 5ft 7in tall woman weighing 13st 1lb (183lb) (a BMI of 30) would face higher premiums. Legal & General starts to increase premiums once the BMI reaches 30. Norwich Union, Aegon and Friends Provident typically add 50 per cent to the cost once the BMI reaches 32 to 35.
Any kind of BMI penalty would push up the bill for basic life cover by around £200 a year for an otherwise healthy 40-year-old couple wanting to protect a £200,000 mortgage. For example, the most competitive companies, including Aegon, Norwich Union and Legal & General, charge around £36 a month for a joint policy (one that pays out on the first death only).
Aegon would typically charge the couple £440.28, according to moneysupermarket.com, the price comparison service, and Legal & General £423.24. If the applicants were overweight but without any other health problems, however, the cost could rise to £635 at L&G and £660.42 at Aegon. At age 45, the overweight penalty jumps to £324 annually, pushing the overall bill to about £1,000 a year.
In some ways single people are even more heavily penalised. A single person could be charged an extra £132 or more annually, even at the most keenly priced companies, if their BMI set insurers' antennae twitching. They could be stung by an extra £198 at the age of 45.
Kevin Carr of LifeSearch, the specialist financial adviser, says that behind the scenes companies will raise premiums sooner and more dramatically than they admit publicly, with customers being asked to pay more when the BMI has touched just 27.
"Every application is different. But certainly we see premiums increased at a BMI of 27. In general, the cheaper the premium, the sooner it is raised because of weight," says Carr. "That's why it is always important to shop around for cover and not be lured by the best-buy premiums. The chances are you may not get them, and you may actually do better with a company that isn't in the best-buy tables, because it doesn't penalise the overweight so aggressively."
It is vital to be honest about your height and weight when applying for insurance. The Financial Ombudsman Service is seeing more claims refused because incorrect details were given. A spokeswoman for the Ombudsman says each case is treated on its merits. However, the signs are that the adjudicator is taking a reasonably hard line.
For example, it recently rejected a complaint following the death from a blood clot of a 37-year-old man who had stated on his insurance form that he was 6 feet tall and weighed 16 stone (224lb) when his height at death was 5 feet 9 and he weighed 20 stone (280lb).
The Ombudsman sided with the insurer on the grounds that the applicant could not honestly have thought he weighed only 16 stone when he applied for the policy. We may all soon be forced to share the bill for piling on the pounds as insurers become increasingly alarmed at our burgeoning backsides.
"We are seeing weight go up across the entire population. This may force us to stop looking at the issue as an individual problem but as a problem for the whole nation, and premiums may have to rise across the board," says Matt Rann, the head of underwriting at Aegon.
This view is echoed by Michael White, Norwich Union's chief underwriter, who adds: "If the [population] as a whole is becoming more overweight, this will have an effect on general premiums. Insurers are keeping a close eye on all available government, medical and academic evidence, as well as their own claims experience."
Yet some recent academic reports have questioned whether being overweight does indeed reduce life expectancy in the absence of other health problems such as diabetes or high blood pressure. Simon Capewell, professor of clinical epidemiology at the University of Liverpool, is sceptical about some of the claims about weight, particularly at younger ages. He describes the risk of anyone aged up to 45 dying prematurely because they are overweight as "almost non-existent".
He says: "If they are the kind of obese people we see on television, where they need two beds to sleep in and a crane to lift them off, then of course there are health risks. But being a bit cuddly is not going to kill you.
"It is true that this picture changes later in life at 65 or 75, but even then it is a pretty modest risk. Smoking is the big killer. It doubles your likelihood of dying at any age." A paper from Heriot-Watt University for the Faculty of Actuaries also questioned the automatic assumption that the overweight die young. But the paper doesn't cut much ice with insurers, so we all have another reason to stay fit and healthy.
BEAT THE PREMIUM SQUEEZE
Always give accurate details of your height, weight and any other medical history, or risk claims being rejected.
If you are charged more for being overweight when you are otherwise healthy, ask your doctor to write a note to the insurer.
Supply alternative data, such as hip to waist ratio, which can point to good health and challenge weight assumptions.
There may be reasons why you are heavy. Athletes, for example, carry more muscle. Point this out to the insurer.
Shop around aggressively. Seemingly cheap insurers are quicker to raise premiums for the overweight than those that seem more expensive. Getting those keen prices can prove difficult.
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/02/19/cmobese19.xml