How to tackle the high cost of illness cover

BODY statistics, such as height and weight, affect the cost of certain types of insurance. But even Rugby World Cup players would be classed as overweight or obese by insurers if they bought a deal without professional help.

PROTECTION insurance is the umbrella term for policies that pay out tax-free cash to replace lost earnings when a family is caught up in a health crisis. Critical illness cover gives a lump sum if an individual suffers a serious condition such as cancer, while income protection replaces monthly earnings if a policyholder is sick or injured and cannot work. Finally, life insurance pays out a lump sum to family if a policyholder dies.

But many people are surprised to learn what affects the price of these deals. Here are five examples:

1. BODY MASS INDEX

MATCHING your weight and height on a ‘body mass index’ chart comes up with a figure that says something about you in the eyes of medical professionals and insurers.

Tom Conner, director of protection insurance adviser Drewberry Insurance, says: ‘The higher the figure, the higher the risk of ill health and early death.’

But most insurers referring to this chart do not differentiate between fat and muscle. So well-built rugby players can end up classed as obese, even though they are far from it.

Any number between 18.5 and 25 is deemed healthy by the NHS.

A 5ft 6in woman weighing 9st 7lb would have a BMI of 21.4, and a 6ft man weighing 13st would have a figure of 24.6. Numbers between 25 and 30 are overweight; above 30 is obese. Below 18.5 is underweight.

Welsh prop Gethin Jenkins has a BMI of 34.2, technically obese, much like South African player Bismark Du Plessis, with a figure of 31.9.

When an individual’s figure goes beyond the healthy threshold, insurance companies usually add half the premium again to a quote, or even double it.

A 40-year-old with £150,000 of life insurance cover could pay as little as £15 a month with a healthy BMI level. But if overweight they could end up paying £22.50, according to calculations by Drewberry Insurance. This adds up to £2,250 extra over a policy’s typical term of 25 years.

A similar plan with critical illness cover on top could cost £78 a month, or double for obese customers – a difference of £23,400 over 25 years.

Conner says: ‘If you have a high BMI avoid taking the first price you are given. Speak to an independent adviser who can assess your individual situation and will know the best insurers to speak to.’

2. YOUR FAMILY’S HEALTH

FITNESS fanatics who watch what they eat might find their efforts are thwarted when it comes to insur- ance if the rest of their family has a history of poor health. Alan Lakey, protection insurance expert for specialist adviser Highclere Financial Services, based in Hemel Hempstead, says: ‘Family history has a big effect on underwriting because many conditions are proven to be family-linked such as breast cancer and heart disease.’ He adds: ‘Any woman whose mother or sister was diagnosed with breast cancer before the age of 50 will face increased premiums on a critical illness policy.’

But it is vital that customers do not try to hide their medical history as insurers will have access and honesty now prevents problems in the future.

The route to a better price based on accurate information is via an adviser. Lakey adds: ‘An adviser will be aware of which companies are competitive for various conditions. Buying from a bank or a comparison website will not achieve this.’

3. AGE

MILESTONES such as buying a house, getting married or having children are typical triggers for people deciding to buy insurance. But the younger the better for buyers because insurance gets pricier the older people get. This is because health problems become more likely as age increases. The tip is to buy when you least need insurance – while young and healthy – and when it is keenly priced.

4. HOBBIES

DAREDEVILS who race cars, fly aircraft, parachute from planes or dive in the sea with scuba masks and oxygen tanks will experience thrills galore. But they will also pay higher insurance premiums. Or the hobby will be excluded from a policy altogether.

On-piste skiing and snowboarding are usually covered.

Conner adds: ‘According to the British Journal of Sports Medicine, rugby is officially the world’s most dangerous team sport.

‘The good news for amateur, nonprofessional rugby players is that they can often obtain income protection without a premium increase if their overall health is normal.’

5. YOUR DRIVING

DEPENDING on the insurer, a customer might be asked whether they have ever been in a road traffic accident or disqualified from driving.

In a minority of cases, their answer could be built into the life cover or income protection insurance underwriting process – the work that goes into issuing a policy – if someone is deemed reckless.

Those who drive for a living might also find their income protection premiums are higher than average.