A couple of weeks ago I picked up a rate book from one of the finest and largest life insurance companies in the industry. I was just scanning the pages and it occurred to me that the term insurance premiums looked really high. I decided to do a comparison between todays premiums and the premiums of yesteryear. The results were quite surprising.
Although I was very aware that term life insurance premiums had been lowered considerably by insurance companies I was not aware that the difference was so great. The premiums for the year 2007 are one third of those for 1987 in many a case and in some cases as little as a quarter of the 1987 costs. That is a dramatic change. Why is this?
I am not an actuary or a statistician but based on what has occurred in the industry over that time period it would seem that the rise in demand for term insurance has dramatically affected the cost. Everyone wants term insurance now. Some people are aware that they may need to convert to a permanent policy later on but there are those who have no intention of buying any other type of insurance.
I will not debate the correctness of thinking of either side at this point as this article is really intended to emphasize the great reduction in term premium rates. I do think, however, I should touch on which policies are the ones people tend to buy most and why. this is for the benefit of the reader.
The 10 year, 20 year and 30 year term policies tend to be the most purchased...the 20 year term policy being the most outstanding. Round and about age 30 or may be age 35 you find yourself in a pretty solid financial position. You have achieved some measure of success. May be you are already married or, on the other hand, may be you are thinking about it. You want to have children and it occurs to you that you will need some life insurance. You think, why not buy it now while you can still get your policy at a low rate and while you can still qualify. With these plans in mind you find the 20 year or 30 year term policies could fit your need nicely.
If for some reason you had found financial stability a little later in life and your children are in their teens you may feel the 10 year term policy would be ideal.
Regardless of your situation now you will find that later on you need to buy additional life insurance. Your term policies may be about to expire. In any case they will expire at some time. If you are still in good health you can start a new term life insurance policy at a higher premium than that of your original policy.
On the other hand, life insurance companies allow you to convert your term policy within a specific period. If you are still within that period you can convert to a permanent policy. A good policy to use would be a universal life policy. I suggest this because of it's flexibility. You can also convert to whole life but this will mean a higher premium.
All in all there is no reason why anyone who needs life insurance today shouldn't own a policy. The premiums are so low.
In moves to tighten the belts, the life companies have lowered the limits they use to categorise peoples weight. This means that those who are merely overweight and would have previously qualified for a standard premium, now are punished with higher premiums – and the premiums rise quickly the more overweight the insurers believe you are.
How do they classify you weight? They use something called the Body Mass Index. The typical insurance company considers a BMI of between 18.5 and 24.9 to be normal. Over 25 classifies you as overweight. Above 30 and they think you're obese.
The BMI is calculated as follows. Got your calculator ready?
Enter your weight in pounds and multiply it by 703.
Divide the result by your height measured in inches
Again divide the resulting number by your height in inches
The result displayed is your Body Mass Index
To give you a fix on what this means for you, here are the BMI's for twelve famous people:
Under Weight
Pamela Anderson – ex Baywatch Actress 16.2
Victoria Beckham – Footballers Wife 17.0
Renee Zellweger – Actress 18.0
Normal Weight
Catherine Zeta Jones – Actress 19.7 Davina McCall – TV Presenter 20.8
Alan Shearer – Newcastle Footballer 24.4
Over Weight
Russell Crowe – Hollywood Actor 25.6
Charlie Dimmock – Gardening Presenter 26.0 Jonah Lomu – New Zealand Rugby Player 29.2
Obese
Norman Schwarzkopf – US General 30.5
Lisa Riley – Actress 34.4
Dawn French – Comedienne 43.8
When you apply for life insurance, your weight and height are just two of the many questions you have to answer. From this, your Body Mass Index is assessed and if it exceeds the insurers acceptable limits, they might ask for a doctor's report. In larger cases they might also ask the applicant to have a medical examination. If this confirms that your weight is of genuine concern, then you can expect to have your premium loaded by at least 50% and as much as 400% at the heaviest end. In fact around 25% of applicants will experience problems getting life cover due to their weight. In extreme cases the insurer will even refuse your application.
But sometimes the insurers are a little flexible. In acknowledgement of normal middle age spread, they will take your age into account when assessing your BMI. Wonders of wonders - they do accept that people naturally put weight on as they age! But if you're young and overweight, they'll certainly hit you hard. So overweight and 38 will be loaded much more than overweight and 58.
For example, a 35 year old, healthy non smoking man who asks for £150,000 level life insurance cover over 25 years will currently be quoted £18.77 by Scottish Provident - but this could easily leap to £35 if he's overweight and up to £47 if he's obese.
And over the last 20 years weight has been a growing problem. Today, more than 50% of women and 60% of men are judged as overweight. And looking at our children, the problem won't improve. In youngsters aged between 2 and 15, 28% of girls and 22% of boys were found to be overweight.
So if you have a BMI over 25 it's going to be especially important to get your life insurance with as big a discount as possible. In our experience that means you'll have to shop on the Internet. Competition there is high and this has forced web sites to give clients very significant discounts.
Both Donald Lusan & Michael Challiner are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Donald Lusan has sinced written about articles on various topics from Finances, insurance agents and Finances. For more than 40 years Donald has been known for his extensive knowledge of the life insurance business. He has represented some of the largest and most admired life insurance companies in the United States as well as Canada. His advice is invaluable. Don. Donald Lusan's top article generates over 40500 views. to your Favourites.
Michael Challiner has sinced written about articles on various topics from Finances, Advertising Guide and Quit Smoking. Michael writes for Scrouge Life Insurance who offer and life assurance. More information -. Michael Challiner's top article generates over 165000 views. to your Favourites.