Fat is a life insurance issue!

If you're overweight, the chances of obtaining life insurance at standard rates are becoming slimmer as the obesity issue balloons to prominence on the nation's health agenda. Even if only slightly overweight, you could end up paying as much as 50% more for life cover while the seriously heavy could face a five-fold increase in premiums or be refused life protection completely.

Life insurance providers have become increasingly concerned about Britain's obesity epidemic. Fat people have a tendency to die at a younger age than their normally proportioned colleagues. Government statistics indicate that, on average, obese people die nine years before their leaner counterparts.

The Association of British Insurers (ABI) notes that the UK levels of obesity have trebled over the past 25 years. Now some 60% of the population can be classified as 'overweight or obese', recognised as a leading cause of death (9.6% of men, 11.5% of women) in developed countries.

If current trends continue, without radical change to eating, drinking habits and couch potatoism tendencies, then obesity will soon overtake smoking as the leading cause of premature death in the UK.

Obesity increases the risk of heart disease, hypertension, diabetes and cancer. So non-standard higher premiums will figure in critical illness cover, income protection policies and family income benefit schemes as well as straightforward term insurance, whether or not related to a mortgage.

According to Lifesearch, two years ago 1 in 5 applicants for life insurance would have been deemed 'non-standard'; today it is estimated that more than two thirds fall into this category. Now, if you breach the Body Mass Index (BMI) ceiling of around 30 you can expect a 50% hike in premiums.

Body Mass Index still a basic measure

Although recognised as a somewhat crude measurement (think short, muscular rugby players or impossibly slim 6 ft models), the BMI remains the best general indicator at the life underwriter's disposal when assessing the impact of weight on life expectancy. In essence the heavier you are in relation to your height (and thus the higher you score on the BMI scale) the steeper your premiums will be.

For example, a height of 5ft 10in and a weight of 14st 10lb gives a BMI rating of 29.6 The same height carrying 19st yields a BMI of over 38. It used to be that applicants were not penalised by life insurers (all other things being equal) until their BMI exceeded the circa 35 threshold. It had to get well into the 40s before a seriously high premium was required or cover refused.

Now a four or five times standard premium is required for the 38-40 range; over BMI 40 and you might have to come to terms with living without life insurance, unless you can make a convincing case to the medical examiner.

Life insurers are in the protection, not rejection, business and the UK industry collectively provides some of the best value term insurance in the world. But premiums for life cover are based on life expectancy. Obesity has heart attack and early claim potential, and can upset the premium to payout ratio in the long term.

Furthermore, it seems that people routinely 'lie' about their weight on life insurance application forms. In a recent row with the Financial Ombudsman, Standard Life argued this action was tantamount to non-disclosure of material information. The Ombudsman thought it reasonable not to expect consumers to know how much they weigh.

Interestingly, whilst the overweight and the physically impaired are facing ever higher life insurance costs, standard premium rates are falling and have been for the past 15 years. Several insurers, including Tesco and Norwich Union have lowered their premiums again this year. Life insurance represents a very good deal for a healthy (and slim!) 35 year-old male; NU says he could protect his family for the same cost as insuring a 1 year-old (fat?) Labrador!

Advances in medical science have led to longer lives. The key milestones for life insurance purchasing decisions, such as getting married, buying a home and starting a family are now occurring later in life. At age 45 the cost of term insurance is roughly double that at age 25 and any deterioration in health during those 20 years will push premiums even higher, another reason why many are asked to pay more.

Obesity is an issue which underwriters can now get a clear fix on; there are no ifs and buts and the BMI threshold is likely to drop even lower in the future. The Obesity Awareness and Solutions Trust argues that, by loading premiums, insurers "are discriminating against a majority of the people. We need to sit down and ask what the hell is going on." Surely it would be better to get up and actively search the market for competitive life cover, given that life companies vary in their approach to the weight problem. Your family deserves the protection, don't let a few extra pounds stand in the way.

30 September 2005 © Moneyextra.com

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