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Life insurance for people that are overweight
How does a high BMI affect the cost of insurance?
Around two in three Australian adults are overweight or obese, ranking third worst among OECD countries (Australian Institute of Health and Welfare, 2018). One in four children are considered overweight or obese, which is a significant increase from 20 years ago.
You are considered to have a healthy or normal weight with a body mass index (BMI) between 18.5 and 25. When overweight or obese, you are at greater risk of associated diseases and conditions such as heart disease, type 2 diabetes, and stroke. In 2015, 8.4% of disease in Australia was attributable to overweight and obesity.
While BMI is not a perfect measure of health, it is routinely used by insurers to judge your general fitness and can affect life insurance and income protection costs or availability.
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What is BMI?
Your body mass index is calculated as a function of your height and weight. The formula for BMI is:
BMI = weight (kg) / (height (m))2
Essentially, BMI attempts to measure the general fat content of your body and say whether it's healthy for your height. It's important to remember that BMI is not a great measure for everyone because it doesn't take into account individual fat distribution or muscle mass.
Insurers offering life insurance and income protection evaluate your overall health and likelihood to make a claim when determining premiums. BMI is not the only metric they use, but it is an important one.
As such, if you have a BMI between 25 and 30 (overweight), you may face increased premiums, and if your BMI is above 30 (obese), you might have trouble getting life insurance at all. Conversely, if you have a low BMI or lose weight, you may be rewarded with lower premiums.
What else should you be aware of?
As mentioned above, BMI is far from the only factor an insurance company will consider when evaluating your health. Other things they will consider are existing medical conditions like diabetes or high blood pressure, your age, your history of mental illness, whether you smoke and how often you drink.
Life insurance companies may also use your waistline to inform their decision because weight around your waist is more dangerous than that around your hips or thighs. The fat around your waist is more likely to be visceral fat, which can coat your organs and impair their function.
In addition, insurers will likely request copies of previous medical check-ups and certificates, so they can properly assess your medical history. It is extremely rare for an insurer to reject an application for insurance based solely on the applicant's BMI.
How does being overweight affect your rates?
Life insurers cover you for uncertainties in life and not for events that are likely to occur. With a higher BMI, you are considered to have a higher mortality rate and carry correspondingly greater risk to the insurer.
Given that a high and increasing proportion of Australians are overweight, insurers now place major emphasis on BMI for pricing purposes. The relationship is fairly straightforward: the more overweight you are, the higher you can expect your premiums to be.
How does losing weight affect your premiums?
Even if you're at a healthy weight or only slightly overweight, losing weight can help reduce your premiums. If you have significantly decreased your weight since purchasing your policy, you should be able to get a medical reassessment and have your premiums lowered.
Losing weight or increased fitness may also decrease other risk factors in your life, such as cholesterol content or blood pressure. All of these should lead to lower premiums because of the related dip in risk of death or disease.
Programs that reward you for keeping your weight in check
With all of the above in mind, it makes sense that some companies will actively reward you for pursuing a healthy lifestyle and keeping your weight down. They not only offer discounted premiums but other rewards in the form of movie tickets and more. A few of these are outlined below.
TAL Health Sense
TAL offers a discount of up to 15% to people with a BMI between 19 and 28 who have taken out one or more of their Accelerated Protection plans. This includes life insurance, critical illness insurance and total and permanent disability insurance.
Asteron Life Wellbeing
Asteron offers the following to people who take out a life insurance plan with them:
- 5-25% discounts for BMI below 28 on certain life insurance plans.
- Training plans to keep weight down.
- Recipes and diet plans.
- Health monitoring tools and calculators.
- Prize draw rewards.
AIA Vitality is an extensive rewards program for AIA life insurance policyholders. It offers the following:
- 7.5-12.5% initial discount on premiums.
- "Vitality point" rewards program where you earn points by learning more about your health and doing various things to maintain it, such as dental check-ups. These points can raise your membership level and open up further discounts.
- 50% off Hoyts movie tickets, 25% off Fitbit and discounts on gym memberships.
- Gift cards, travel discounts and other benefits from fitness-related retail and services.
You could be missing out on additional super returns.
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