Life insurance is usually an inexpensive protection product, but are you a straightforward candidate for cover?There are several variables which will have an impact on what you pay and the body has to be in beautiful condition if you are to score the lowest premium for your age and sex.
Falling cost of cover
Over the past decade, the cost of term assurance has fallen by as much as 50%, according to analysis by Lifesearch, with recent years seeing a proliferation of premium rate cuts. As an example, for £100,000 of life cover over 20 years, a 35 year-old non-smoking male is now offered a monthly premium of just £8; his female equivalent is looking at a slightly lower average of £7. This female premium rate favouritism is due to their greater life expectancy and is a situation borne out by mortality statistics. Sixty years ago the average life expectancy was 67 years for men and 71 for women; in 2007 the respective figures were 78 and 82. Term assurance can provide substantial life cover when you are most likely to need it at a surprisingly affordable cost.
Longer life expectancy
The UK provides some of the best value term insurance in the world, although life companies do differ in the rates they offer (albeit the difference is a few pence among the leading contenders compared to a pound or so 10 years ago). Such discrepancy is due to several factors, but the main one is the company's underwriting philosophy, allied to interpretation of mortality tables. Unfortunately, mortality tables are a bit sluggish in keeping up with advances in medical treatment and diagnostic techniques. In the past 100 years, life expectancy from birth for men and women has increased by over 50%; 12 years ago it was calculated that a man aged 80 could expect to live 25% longer than his counterpart in 1960. Despite population surveys and regular updating, the tardiness of mortality statistics means that insurance company underwriting departments need to assess ongoing health trends before fixing normal or standard premium rates for different age groups.They also have to take onboard the company's marketing strategy, whether it is targeting specific age and/or professional groups, for instance, and in-house concerns such as reinsurance facilities, free asset ratios and returns to shareholders.
What's taken into account
Then there's you, the consumer, wanting the best possible deal, though you might not be squeaky clean in health and habit. Your sex and age are just the basic considerations in determining the premium rate; the older you are the higher the cost. Generally, the longer the policy's duration, the more expensive it will be. Extra benefits such as critical illness and terminal illness cover, or double indemnity in the case of accidental death, will push up the premium. Your occupation (bomb disposal officer, anyone?), whether you indulge in dangerous sports such as shark-baiting in the Seychelles, or if you are deemed disabled or impaired in mind or body, or a request for a larger than normal amount of insurance could all be reasons for underwriting scrutiny and adjustment of the premium to be paid. Term assurance can provide substantial life cover when you are most likely to need it at a surprisingly affordable cost. If you are Mr or Ms Average in terms of occupation and lifestyle then the current state of your health is likely to be the key variable for life insurance purchase. Underwriters get alarmed by the presence of cancer and heart disease, and conditions such as diabetes or high blood pressure, particularly if there is a family history of illness. More attention is now given to other aspects of an unhealthy lifestyle. Excess bodyweight and obesity are now viewed as seriously detrimental. Smokers are already punished (the monthly male premium is around £13 in the above £100,000 example) and although the number of people dying from alcoholism has doubled in 15 years, it is calculated that obesity will soon overtake smoking as the leading cause of premature death in the UK.
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A fatter premium
If you are overweight then you can expect your premiums to be higher. Fat people have a tendency to die at a younger age than their slimmer colleagues; it's not the actual weight that drags them down but a medical consequence, the most important being heart disease which is the commonest cause of death in the western world.Obesity generates high blood pressure, strokes, cardiovascular disease and type 2 diabetes; furthermore, the seriously overweight (a body mass index over 30) are more likely to suffer from gall bladder disease, osteoarthritis, chest troubles and cancers of the breast, uterus, prostate and colon. And, of course, recurrent back pain. All of which worries insurance underwriters because of the impact on life expectancy.Obesity has early insurance claim potential so premiums are higher, increasing by as much as 50%; in some severe cases, insurance cover could be refused altogether.
Take care of yourself
Life insurance needn't be expensive, but your state of health must be under control. Look after yourself; if you are seen to be doing that by the insurer, then you'll pay a competitive price for comprehensive benefits. PruProtect, for example, awards points for a healthy lifestyle, which potentially lead to a year-on-year reduction in premiums.
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