Being overweight can affect life insurance premiums

With more than half the adult Australian population now either overweight or suffering from obesity, is it any wonder life insurance companies view obesity and smoking in the same light when it comes to term life insurance premiums?

What is a healthy weight?

The life insurance industry measures your BMI (Body Mass Index) when assessing your life insurance application.

BMI is calculated as: Weight / (Height x Height). For example, a 90kg person, 1.8m tall, their BMI is 27.7.

A healthy BMI for adults is in the range of 18.5 to 24.9 kg/m2, while the World Health Organisation (WHO) defines overweight as 25 to 29.9 kg/m2 and obese as 30-plus kg/m2.

In the insurance industry, you may be considered to be obese if you have a BMI of 30 and above, or if your body weight is 20 percent or more above your ideal weight based upon height, age, gender and build.

Defining obesity for life insurance

Sadly figures show that more than one in three adult Australians is overweight, while more than one in six suffers from obesity (2).

The challenge now is to reverse this overweight and obesity trend before it reaches epidemic proportions.

The Australian Society for the Study of Obesity defines obesity as an excessive accumulation of body fat to the extent that the individual's health becomes impaired.

After smoking, obesity is regarded in health circles as being one of the leading causes of preventable death and serious illness.

Needless to say, the increasing prevalence of obesity across all age groups poses a significant challenge for life insurance companies in their pricing of mortality and morbidity risks, given they not only have to determine someone's weight-related risks at application time but also the likelihood of their weight ballooning out down the track. That's a tough call.

Overweight similar to smokers

While significant energy and funds have been spent for many years now in Australia tackling the smoking problem, the poster-child of the war against cancer, another equally insidious health threat has been steadily gaining momentum here and elsewhere in the Western world - obesity.

And while the anti-smoking campaigns have succeeded in reducing the adult daily smoking rates to 17.4% (1), at the same time Australia has earnt the dubious honour of becoming one of the fattest developed nations in the world.

What the statistics say

• 54% of adult Australians were classified as overweight orsuffering from obesity, an increase from 45% a decade earlier (2).
• nearly half of these overweight/obese men and one-fifth of their female counterparts considered themselves to be of acceptable weight (2).
• Australian men aged between 35 and 44 seem to be especially vulnerable to weight problems.
• While 12% of men in this age group suffered from obesity in 1995, by 2005 this had skyrocketed to 23% (2).
• If the current obesity trends are allowed to continue, forecasts indicate that one in every three Australian adults will be obese by 2025 (3).
• Obesity and its associated illnesses cost Australian society and governments a total of $21 billion in 2005, with obesity and overweight posing a major risk to long-term health by increasing an individual's risk of developing numerous chronic illnesses (2).
• Adults who are overweight or obese and physically inactive are almost three times as likely to develop Type II diabetes, nearly twice as likely to have high blood pressure, and 1.5 times more likely to have ischaemic heart disease (2).
• Obese people are 1.75 times more likely to develop colorectal, breast, uterine and kidney cancer and nearly 2.5 times more likely to get osteoarthritis (4).
• People who suffer from obesity are also more likely to suffer from psychological problems that can seriously impair their quality of life, including anxiety, depression and reduced social interaction (5).

References:
1 Deadly custom in steady decline, The Australian, 3/1/2007
2 Australian Social Trends, 2007 "Overweight and Obesity", Australian Bureau of Statisics, 7/8/2007
3 The Cost of obesity, ABC Health & Wellbeing, 9/3/2006
4 Obesity's huge cost dwarfs Medicare, SMH, 18/1/2006
5 Obesity in Australian Adults: Associated Consequences, Australian Society for the Study of Obesity

Source: Zurich 2008

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September 2010