The core purpose of insurance is to protect against risk. In case of untimely demise, there is a loss of income and hence financial support for the rest of the dependents. Term insurance in this case covers for this loss of income by providing a lumpsum “Sum Assured” to your loved ones in case of your unfortunate demise.
Health plays a very important role in the insurance premium calculation and the company’s decision to issue a policy. It is a no-brainer that healthier people are at a lower risk of death and therefore such proposals are quickly accepted and at lower premiums. Lifestyle habits, occupation, family history, past illnesses have a direct correlation to the premium of the policy.
The insurer may ask you to undergo a complete medical examination to evaluate your current medical condition. The insurance company may also look at chronic illnesses and lifestyle diseases such as hypertension, high cholesterol and diabetes etc. If any or all of such diseases exist, the insurer may:
(a) Refuse to issue the policy
(b) Issue the policy with a higher premium
(c) Issue the policy by excluding death caused by any of these illnesses
(d) Issue the policy with a waiting period for pre-existing illnesses
Also Read : What is the meaning of Term Insurance
What is BMI?
Rakesh is 28-years old and pays Rs.1000 each quarter as a premium towards his term life insurance policy. However, his friend, Rajesh, who is also 28-years old, pays Rs.1050 each quarter for the same policy and sum assured.
What could be the reason behind this difference? Could it be BMI? Most of us have heard of this term at some point or the other. Whereas doctors use it for deciding the prognosis, actuaries use it for calculating insurance premiums.
Body Mass Index (BMI) is an easy method to determine the appropriateness of a person’s weight as compared to his/her height. It is a broad level indicator of a person’s health. BMI measurement considers age, height, weight and gender to recommend an ideal number.
A normal BMI score lies between 18.5 and 24.9 and indicates that the person’s weight is proportionate to his or her height. A BMI chart is used to categorize a person into the following four classifications:
2. Normal weight
BMI measures how much body fat is appropriate basis one’s height and weight. It is calculated by dividing a person’s weight (in kilograms) by the square of their height (in meters). Body fatness is determined by how high the BMI is. The interpretation of BMI, in adults, is fairly uniform and simple.
|18.5 - 24.9||Normal Weight|
|25.0 - 29.9||Overweight|
|30.0 and above||Obesity|
Effect of BMI on Term Insurance Premium
If your BMI is within the normal range, you will be offered the best possible premium for your age. If the BMI classifies you as overweight but at the lower end of the scale, the insurer may still issue a policy with a slightly higher premium. However, with increasing BMI, the associated premium may increase multi-fold.
The underlying logic is simple. Higher BMI indicates a higher chance of being afflicted with heart-related ailments that could prove fatal. Even people classified as “underweight” are at risk of being afflicted with illnesses due to deficiencies in the body. This additional risk for the insurer leads to higher premiums for the policyholder.
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Should you Buy a Term Insurance Plan if your BMI is High?
One of the primary reasons to buy life insurance irrespective of your BMI scores is to ensure you have sufficient financial cover to support your loved ones in case of an unfortunate, untimely demise. More so if your BMI is high. People with high BMI have a higher chance of getting afflicted with diabetes, hypertension, cholesterol, fatty liver, sleep apnoea and gall bladder problems.
These medical issues put you at higher risk as compared to people with BMIs in the normal range. If you have a high BMI, please consider applying for term life insurance immediately. With the above reference tables handy, you can easily compare insurance policies online and buy the best plan that meets your needs.
Apart from protecting your family from financial risks, paying a higher premium for insurance policies can motivate you to change your lifestyle and reduce your weight. The health benefits of being leaner and fitter are priceless!
You may look at the iSelect Smart360 Term Plan offered by Canara HSBC Life Insurance because this is a flexible and comprehensive policy that lets you select the way the sum assured should be disbursed. It can be paid out as a lump sum, in an equated monthly pay structure or part-lumpsum and balance disbursed in instalments over 120 months.
In a nutshell, BMI and term insurance premiums indeed have a direct correlation. A healthy BMI not only brings down the cost of the insurance policy but also keeps you in shape. Although BMI plays an important role in deciding on the issuance of an insurance policy, you should look at several other factors before proposing:
- Check for options to increase cover as per your life stages
- Divide the sum assured for a lump sum and regular income payments upon death claim
- Look for maximum tenure possible to cover for extended loans after retirement
So, even if you have a high BMI choose a term plan which offers adequate financial safety to your family. Needless to say, remaining fit, healthy and in shape is the best way to not just save on insurance premiums, but also for your well-being and longevity.Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised to exercise their caution and not to rely on the contents of the article as conclusive in nature. Readers should research further or consult an expert in this regard.