While promoting a healthy society is a good thing, life insurance companies are making more money from people who don’t fit into ‘ideal’ parameters.
Increasingly they are ‘loading’ customer’s monthly premiums on the basis of ‘Body Mass Index‘.
Body Mass Index is a calculation which determines if a person is either underweight, ideal weight, overweight or obese.
There is science to back this up as an indicator of health because it has been proven that overweight and obese people are more at risk of cardiovascular disease, diabetes and other serious illnesses.
However according to the BBC website and Dr Rob Hicks ‘BMI alone is not a good guide to who is at most risk of obesity and cardiovascular disease. Instead, waist circumference may be a much more accurate measure of future health problems because what matters is where you carry your excess kilos/pounds’.
So why do life insurance companies charge more money when they only ask for a persons height and weight and not their measurements?
It is possible the Body Mass Index calculation is the only method available to them at the moment on which to base their decisions.
It is also possible they have used their financial resources and actuarial boffins to conduct in depth studies into the ratio between a persons BMI reading and the increase risk of health problems.
After all, it’s a heavily regulated business and they wouldn’t want to be seen to not be treating their customers fairly……
If they are all treating their customers fairly then surely they should all treat overweight people the same way.
But they don’t.
Some will offer ‘standard terms’ to people who other insurers will charger more.
It’s all about how much risk the insurance companies are prepared to take. This allows for competition in the market place and it also means it makes sense to shop around.
Online comparison services are good for preliminary research but they will not ask enough specific questions if there are other factors such as health problems or obesity to consider.
Using an independent adviser with access to the whole market who is prepared to research insurers on your behalf and speak directly to the insurance underwriters is the best way to find the right cover for the best price.
And while a good adviser may be able to find the best price, someone who is overweight should prepare themselves to potentially still pay more for insurance than someone who is their ideal weight.