Check your health and reap rewards: Prosperity tries out US system for cutting assurance premiums

UNTIL last year, the payment for term assurance has been pretty straightforward. The premium is dependent on the sum to be paid out and the age of the individual.

Proposals from healthy people with no serious family medical history for moderate cover (say pounds 60,000), are normally underwritten without any further checks.

For larger sums, even if the proposer is healthy, he or she will be asked to provide a report from their doctor. If that reveals anything untoward, the proposer will be asked to have a full medical. For much larger sums (for example, over pounds 200,000), the proposer will have to have a medical anyway.

But one company, Prosperity Financial Services, which is part of Municipal Mutual, is offering a policy for healthy people who take a special Bupa or Nuffield Hospital health check-up. The cost of this check-up is pounds 45, as opposed to the pounds 100-plus usually demanded. If they pass it they will be offered a lower premium. The medical fee is offset against premiums for those who pass the check-up.

This concept of taking a medical to obtain cheaper life cover is commonplace in the US, but so far, Prosperity is the only company to provide it in this country.

This 'Life Choice' policy is only available to non-smokers under 60 whose blood pressure and cholesterol levels are within normal ranges and who have no record of coronary arterial deaths in the family under the age of 60. They must also not be too fat for their age.

The tests include electrocardiogram and blood profiling (which can act as an early warning for heart disease, as well as showing up a wide range of medical ailments) and counselling on diet, exercise and coronary risk factors to encourage you to lead an even healthier lifestyle.

If you feel you might not qualify for the cheaper policy, you can opt for Prosperity's standard policy. However, the questions they ask on their proposal form are more detailed, and there are more, than on standard proposal forms for other companies.

For example, they inquire about family history - cancer, stroke, diabetes, kidney, circulatory, heart or hereditary disease. General Accident Life's standard form asks about height and weight, and asks whether you have had blood tests or treatment for any disorder, or whether you have seen a doctor within the past five years. They both enquire about Aids, hazardous pursuits or travelling outside the UK.

Jeremy Oakley, head of marketing for PPP Lifetime, which offers a very competitive rate for term assurance, says: 'We will watch what happens with interest. When we launched our term assurance, we did try to add value by offering large discounts on health checks, follow-up visits to well clinics and dietary and health consultations, but it didn't really work. People didn't take it up so we withdrew the discounts.

''We think what Prosperity is doing is a nice idea, but wonder how long it can hold those premiums down.'

A spokesman for GA says: 'I know this system is very popular in the US, and in some respects it does offer a small number of people very beneficial terms. But the policy does only accept first-class lives, and things could come out of the tests that would need explaining.

'If people filled out a standard form for a not very high sum, these points might not come out and they would get the insurance. I wonder what happens to people who are refused the cheaper premium because of the results of the medical?'

Stuart Clarke of Prosperity says: 'If they fail the medical they are offered the standard proposal and as long as nothing too serious is found there will be no problem. We have not turned anyone down, yet.'

Prosperity will also pay out the sum assured on diagnosis of a terminal illness where the life expectancy is less than 12 months, as long as the policy has more than two years to run.