Life insurance and Obesity: What You Should Know

The average Canadian male and female has a body mass index (BMI) of 27.4 and 26.7, respectively.

Both qualify as “overweight” according to a BMI chart. While it is true, life insurance and obesity do not go well together, life insurance companies are more lenient than many think.

Most overweight people can still qualify for affordable rates, provided they do not have any underlying health conditions.

How does your weight impact your life insurance premium rate?

Life insurance companies look at many factors to determine the level of risk you represent, one of which is your body mass index (BMI). Depending on your health, you will be assigned one of the following health classifications: preferred plus, preferred, standard and sub-standard. Your premium rate depends on the health classification you receive. The better the health classification, the lower the monthly premium is.

• Preferred Plus: This is the best rating one can get and is reserved for people who are in good health and do not have any medical issues. If you are considered overweight, you are not likely to be rated as Preferred Plus. However, some insurers may make an exception if you are only considered to be slightly overweight and are otherwise very fit.

• Preferred: Someone who is in good shape but has had a minor health issue is likely to be assigned a Preferred rating. If you are marginally overweight but do not smoke or have any weight-related health issues, like high blood pressure, you can expect to receive this rating. Your premium rate will be slightly higher than someone with a preferred plus rating.  

• Standard: Typically includes those in average health but who have one or two common health issues, like high blood pressure or cholesterol. If your BMI reading puts you in the obese category, you are likely to receive a Standard rating.

• Substandard: This rating goes to those who do not fit into any of above three classifications. If you have a serious health condition — like bipolar disorder — you may be rated as Substandard. Unless your BMI is very high, you are not likely to be classified as high-risk on the basis of your weight alone.

Every life insurance company has an upper and lower weight limit for a specific height for each of these categories. Along with your BMI, insurers are likely to also consider your gender and age.

Some life insurers, however, use an ‘ideal’ male weight chart[PCH1] ,which can be advantageous for women. This is because the ideal male weight range is higher than the ideal female weight range for the same height. For example, a woman who is 5 feet 11 inches tall has an ideal weight range of140-171 pounds. Whereas, for a 5 feet 11 inches male, the ideal weight range is155-189 pounds.

Some providers are not reluctant to award the best category to applicants with a slightly higher BMI, especially if they are very fit and have a high chest-to-waist ratio. Therefore, if you are overweight, the best way to get the lowest possible rate is by working with an experienced broker.They can help you apply with insurance companies most likely to quote you the best rates.

Why do life insurance providers have BMI requirements?

Life insurance and obesity can be a complex topic. Life insurance companies calculate your premium rates on the basis of your life expectancy. The longer you are likely to live, the better your premium rate will be. Obesity, however, is currently understood to shorten your life expectancy and consequently results in higher premiums. Some research shows that moderate obesity shortens a person’s life by three years while severe obesity can reduce life expectancy by 10 years [PCH2] .

Generally, people who are obese are considered more likely to develop several health conditions. According to the American Diabetes Association, people who are overweight have a higher risk of developing type 2 diabetes, heart disease, and stroke.Other health conditions that are linked to obesity that may shorten your lifespan include:

• High blood pressure

• High cholesterol

• Fatty liver disease

• Kidney disease

• Osteoarthritis

• Sleep apnea

Even if you do not have any weight-related health issues, insurance carriers are not likely to give you a Preferred rating because being overweight may put you at a greater risk of developing these diseases later.

How to calculate your BMI?

BMI is a measure of body size and combines your weight with your height. You can find out your BMI by using this simple formula: kg/m2(where kg is your weight in kilograms and m2 is your height in meter squared).

BMI Categories:

• Underweight= <18.5

• Normal weight = 18.5–24.9

• Overweight= 25–29.9

• Obesity= BMI of 30 or greater

Can I qualify for life insurance if I am overweight?

In most cases, the answer is yes. Keep in mind that life insurance companies are primarily concerned with your life expectancy. If you are slightly overweight, do not smoke, and do not have any weight-related health issues, you should expect to receive a Preferred rating.

When evaluating your level of risk, life insurance providers will look at:

• How overweight you are? The farther you are from an insurers ideal weight range, the costlier life insurance is likely to be.

• Do you have any underlying health conditions? Being overweight is often linked to hypertension, type 2 diabetes, renal failure, and other medical conditions. If you are overweight and have one or more medical conditions, the best you can realistically hope to receive is a Standard rating.

• Do you smoke? Smoking alone can push up your premium rate considerably. Smokers pay two to five times higher premiums than non-smokers. If you are classified as obese and smoke, you are likely to be rated as high risk. Consequently, your premium rate will be much higher.  ‍

Can I receive a denial of coverage if I am overweight?

Life insurers generally do not deny applicants for being overweight. However, morbid obesity is another matter. Your life insurance application may be turned down if you are considered morbidly obese — that is, when your weight is 80 to 100 pounds over your insurers ideal weight range. People who are morbidly obese have a significantly higher risk of developing serious health conditions, including cardiovascular disease and certain cancers, and hence have poor insurability.

Can you lower your premium rate if you lose weight?

If life insurance is expensive right now because you are considered overweight; you can qualify for a better premium if you lose weight.If you have lost weight and been able to keep it off for 12 months or more, you can apply for reconsideration. Most likely, your provider will ask you to take a fresh medical exam to prove your health warrants a rate adjustment.

What if I am denied coverage?

If you are unable to get a traditional life insurance policy, you still have options, like group life insurance and no-medical life insurance.

Group life insurance 

Group life insurance is usually inexpensive, sometimes even free. If your employer offers it, you should take it without any hesitation. Because it does not involve a medical exam or health questions, your weight or health will not impact your insurability.  

Generally, we recommend group life insurance only as supplemental coverage because the death benefit is usually only one or two times your annual salary, which is likely not to be a big enough financial safety net for most people. However, if you are not eligible for an individual policy because of your weight, it can be your only option to take out a sizeable policy. The other option — no-medical life insurance — has even smaller death benefits.

Group life insurance, however, has a few drawbacks of its own. Apart from the limited death benefit, you will have to go along with the type of life insurance and benefits your employer picks. For example, if your employer decides on term life insurance, that is what you will get, even if a permanent plan suits your situation better. Also, you are likely to have a limited choice of riders. Life insurance riders are additional benefits that you can add to your coverage for a small fee. In short, group life insurance policies are not as customizable as other plans.  

Lack of portability is another problem. Generally, you cannot take a group life policy with you when you change employers. If you leave or lose your job, your coverage is likely to end.

No-medical life insurance

The other option available is a no-medical life insurance policy. As the name suggests, you do not need to take a medical exam to prove insurability. You can get approval even if you are not in perfect shape.

No-medical policies are either simplified issue or guaranteed issue. Simplified life insurance is the more affordable of the two, so you may want to give it a try first.

Simplified life insurance does not require a medical exam, but you will have to answer a few health questions. The insurer will judge your insurability and set your premium rate on the basis of your answers. The policy amount is usually capped at $50,000, but some Canadian insurance companies issue plans with a benefit amount of $1,000,000 or even higher. However, these policies are costlier than fully underwritten life insurance. Most simplified plans include a waiting clause. If you die from a natural cause within the first two policy years, the insurer will refund the premium dollars, plus interest, instead of paying the death benefit.

Guaranteed issue plans involve neither a medical exam nor health questions. Coverage is extended to all applicants, provided they meet the age criterion. The maximum coverage amount is usually $25,000, though some providers offer up to $50,000 in death benefit. All guaranteed life insurance policies come with a waiting period — usually two years but can be longer depending on your insurer.

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Conclusion

Life insurance and obesity do not go well together. But that does not mean you will not be issued coverage if you are considered overweight or obese. You can very well qualify for traditional life insurance and even receive a preferred rate. It all depends on how over the insurers ideal weight you are, and the other aspects of your health. However, people who are classified as morbidly obese may find it difficult to be approved for a medically underwritten policy. If this is the case for you, consider a group or no-medical plan.

If you are worried about how your weight will impact your insurability and premium rate, speak to an independent broker like Dundas Life. We can help you secure the desired level of coverage at the most affordable rate