Being an overweight person has many social challenges in today’s society. But did you know that being overweight can also significantly affect your life insurance policy premiums? Insurance companies look at a variety of factors when quoting you a life *policy, with the primary factors being: your age, height, weight, smoking status, gender, and any significant medical conditions. Together, these parameters allow the insurance companies to estimate your life expectancy.
Life expectancy is nothing more than a way to represent how long the insurance companies expect you to live using probabilities. If you are currently age 30, and based on your health parameters the insurance companies expect to you live to age 81, there is a very high probability that you will outlive your 20 or 30-year term life insurance policy. In other words, you will get a very good, fairly low premium rate on your term life insurance policy.
However, if you are overweight, your life expectancy can be reduced. A study by research health economists at RTI International showed that being obese can reduce life expectancy by five to eight years. Being obese and a smoker can reduce your life expectancy by up to 21 years. As your life expectancy decreases, the cost of your life insurance increases. It can increase dramatically if the life insurance company calculates your life expectancy around ages 60-70 as that is where many people target their life insurance term policies to align with the beginning of one’s retirement years. For example, a 35-year old person may purchase a 30-year term life policy, and a 40 to 45-year old person would purchase a 20-year term life policy.
So what can you do? Here are some tips:
- Purchase a shorter-term insurance policy. If your family’s financial needs can be met with a 5, 10, or 15-year term life policy, it will cost you a lot less as the probability of you dying in the short-term is a lot less than 25 or 30 years from now.
- Commit yourself to a health and wellness program. If you are able to lose weight and expect to be in good health in the future, you can always surrender your life insurance policy and purchase a new one when your premium costs will be a lot less after you have lost weight.
- Maximize your employer’s group term insurance policy. Group policies average the risk amongst members of the group, so those in poorer health benefit from being on the “less healthy” side of the average. Employers often give you group term life as part of your core benefits, typically 1-2x your annual salary. Some employers will also have a supplemental insurance option where you can add up to 5x your annual salary.
- Add a spousal insurance rider to your spouse’s life insurance policy. This add-on to your spouse’s policy would insure your death. A spousal rider could cost less than an independent policy.
- Purchase an accidental death policy or add it as a rider to your existing policy. The cost of accidental is calculated separately from your health status. While this only covers accidental death, it is an expensive way to add more death benefit at a fairly low cost.
In the end, exactly how much life insurance you need is a personal decision. Don’t let your current health status deter you from buying life insurance. Just having a little insurance, even if it is less than your desired amount, can greatly ease your family’s transition should you pass unexpectedly.