Insured at a healthy discount
As life rates tumble, those who lead 'preferred lives' can save thousands on their cover. Dido Sandler reports
Sunday 07 January 1996
Savings of thousands of pounds over the term of a policy can be made if you are able to show insurers you are not overweight, have low cholesterol and blood pressure, and have not smoked for at least two years.
The life insurance policies affected are called term assurance, which pays out an agreed sum if you die during a set term. A handful of companies (listed in the table) now offer special discounts for what are known as preferred lives - people considered healthier and therefore lower risks. These moves come as life insurance rates tumble, reflecting fewer Aids deaths than previously feared by insurers, as well as stiffer competition.
Preferred life discounts are usually only available to those insuring for more than pounds 100,000. Below this level companies deem it uneconomical to perform the medical tests necessary to be able to underwrite at preferred life discount rates.
Sun Alliance, Swiss Life and Zurich Life give discounts for such health attributes as low blood pressure, not being overweight, and low cholesterol. For example, a 44-year-old non-smoking man buying pounds 250,000 of life insurance can cut his monthly premiums from pounds 91.17 to pounds 73.25 with Zurich Life if he meets a number of health-related standards. These include low blood pressure and cholesterol, a certain weight/height ratio, low-risk pastimes and a low-risk occupation, and not travelling too much.
Rosalind Pearson of Swiss Life said: ''The main causes of adult death are cancer, heart attack and stroke. Any action which helps mitigate the risk of suffering from one of these is viewed favourably." She notes that being overweight is associated with heart disease, stroke and certain cancers; smoking causes most lung cancers; and that alcohol in excess is said to raise blood pressure. But even with the healthiest way of life, preferred life discounts are not available to those with a family history of heart disease or cancer.
Canada Life offers its lowest premiums to professionals and people in higher socio-economic groupings, because they are likely to live longer. Swiss Life and Sun Alliance also give favourable prices to these groups.
Preferred lives are still only a small niche in the market. This contrasts with the situation in the US, where virtually all policies differentiate on lifestyle to some extent. In fact it is an American company that is now seeking to introduce special rates for marathon runners in the UK. Runner's Edge policies, offered in the US by Indianapolis Life, give cheaper rates for runners, as actuaries believe they live longer. Better marathon completion times command lower premiums - quicker athletes are slower to pass life's finishing line, the suggestion seems to be. In addition, spokesman Kurt Jaenicke says that the older the runner, the greater the additional cardiovascular benefit, and the larger the resulting discount.
People who do not qualify for preferred life treatment, however, can still qualify for reduced-price term insurance. Jonathon Bowyer of analysts Swiss Re notes that preferred lives policies aren't necessarily the cheapest - so shop around. Virtually all the 3 million people who took out term assurance policies at the height of the Aids scare, from 1989 to the end of 1993, are now paying too much for cover. By rebroking or swapping their current policies for cheaper versions, these individuals can save. Independent financial advisers should be able to trawl the market to find you a cheaper policy. IFA Promotion, which promotes independent financial advice, will give the names of three firms in your area which will provide a free half-hour consultation during January. Telephone 0117 971 1177.
Moreover, unredeemed bon viveurs will be gratified to hear that Stalwart Assurance is offering better pension rates for smokers when they convert their accumulated pension funds into an income for life, called an annuity. The firm expects smokers to die sooner, so they should be entitled to more money while still around. For example, a 65-year-old male who has smoked 10 cigarettes a day for the past 10 years will be offered rates 10 per cent higher than the Prudential's, says Stalwart.
Preferred life, preferred price
Life insurer Discount and criteria
Canada Life Up to 50% discount.
Professional status/income, non-smoker.
Sun Alliance Up to 12.5% discount.
Height/weight ratio, blood pressure, family history, occupation/income, under 21 units of alcohol per week, non-smoker for five years (cotinine test to detect smokers).
Swiss Life Up to 24% discount.
Similar to Sun Alliance, plus points system for fitness and other factors. Cotinine test.
Zurich Life Up to 24% discount.
Similar to above. Preferable that applicant has never smoked. Moderate drinking allowed.
Source: 'Planned Savings' magazine
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