As the British get bigger, fat has become a financial issue

Life offices are loading premiums to reflect the health risks of being overweight, says Faith Glasgow
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The Independent Online

There's just so much of it. A report on obesity published last year by the insurer Swiss Re highlighted that obesity has increased two to threefold in the UK over the past 20 years. More than 21 per cent of the adult population is now officially obese, while a further 38 per cent is "merely" overweight.

Why is this such a worry for companies like Swiss Re? The trouble is, of course, that while fat people don't necessarily die of fatness, they do die of the various conditions that tend to go with it - including high blood pressure, increased cholesterol, diabetes and some cancers. Moreover, they tend to die younger. That's bad news for life insurers, who would ideally like us all to live for ever (as long as we keep paying the premiums).

But insurers aren't letting it get them down. Instead, as the British get podgier, life offices are getting fussier. They're asking more questions. According to Kevin Carr of the insurance broker Lifesearch, some application forms now run to more than 30 pages. And, as more is known about the health risks linked to extra weight, they are gradually lowering the break point at which "very generously built" becomes "obese" and premium loadings kick in.

The key calculation in this respect is the relationship between your height and your weight, in the shape of the Body Mass Index, or BMI. This is worked out by dividing your weight in kilograms by the square of your height in metres to give a figure generally somewhere over 20.

The "desirable" bracket is 20 to 25; above 25 is overweight, above 30 is obese. (To put that into context, someone 5ft 10in tall weighing 15 stone has a BMI of just over 30.) If you get towards 40, you're officially pretty enormous - "morbidly overweight", in technical terms. "A few years ago, clients with a BMI of 33 or 34 would have been on standard life-premiums, but now we're seeing loadings being applied at around 28 or 29," Carr says.

According to Tony Jupp, chief underwriter at Norwich Union, those loadings typically amount to a 50-75 per cent increase in monthly premiums to reflect the added mortality risk. But he stresses that there's no hidden agenda: "Most people would recognise the people who are affected as abnormally large," he says. "We still take the vast majority of people; we're not looking to sell to a fit 20 per cent at standard premiums and load the other 80 per cent." The good news is that you won't be penalised if you've put on weight since you took out your life cover: it is a long-term policy, and the tendency for most people to pile on the pounds as they get older is built into the package.

However, there is a growing trend to shop around, particularly on the back of regular announcements about falling premiums. Kevin Carr sounds a note of warning in this respect: "Don't cancel your old policy until you've had the new one confirmed. We have stories of people who stop the old one, go for a cheap quote and then find they've been loaded because of their weight." Fat is a financial issue in other respects, too. Take critical illness cover. As Carr points out: "You're much more likely to claim on this - if you have a heart attack, say - than to pop your clogs altogether." As a consequence, critical illness premiums could be doubled or trebled if you are deemed to be overweight.

But there's one financial arena where being big can be rather more beautiful: annuity rates. Because being overweight tends to shorten your life expectancy by several years, you may find that you qualify for a 3-5 per cent uplift in your annuity.

Unfortunately, of course, the actuaries who bestow those extra pension pounds work on the likelihood that you're not going to be around to enjoy them for all that long. "You won't see a massive uplift for obesity alone, but it normally comes with other conditions such as diabetes or high blood pressure, and the combination can make a significant difference," says Peter Quinton of the Annuity Bureau.

When cheap isn't cheerful

"You tend to find that the cheapest companies for someone in perfect health are not necessarily the best if you have an existing health problem," says Paul Mellor at The Insurance Surgery. For example:

* Mr Jones obtains four quotations for life cover from companies A, B, C and D. A's premium is £20 a month, B's £22, C's £23 and D's £24.

* As Mr Jones is obese, he expects a loading, and all four are asked to requote. A, B and C use one reinsurer, D another.

* The first reinsurer recommends a 150 per cent loading, giving these total premiums: A, £20 + 150 per cent = £50 a month; B, £22 + 150 per cent = £55; C, £23 + 150 per cent = £57.50. D's reinsurer recommends 100 per cent loading, so; D, £24 + 100 per cent = £48.

* The result is that the cheapest original quote is no longer the cheapest final quote.

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