What impact do factors like your weight, age and smoking status have on your ability to buy life insurance?
Holding life insurance can be a lifelong gift to your family and provide a lot of peace-of-mind, particularly if you have debt or dependants. Life insurers take into account a number of different factors when assessing insurance applications, but asking your insurer about the impact these factors might have can sometimes be difficult.
Here are the answers to some commonly held – but seldom asked – questions you might have about your ability to buy life insurance.
Got any insurance questions in mind? Don’t hesitate to contact us. Get in touch.
Am I too overweight to buy life insurance?
Life insurance applications ask for your height and weight, and insurers typically use a measure known as Body Mass Index (BMI) – which is calculated by dividing your weight in kilograms by your height in metres squared – to assess whether you are overweight.
A BMI of less than 18.5 is considered underweight, with 18.5-24.9 classified as a healthy weight range. Anything over 25 is considered overweight.i
People who are overweight have higher rates of death and illness than people of healthy weight and are more susceptible to conditions such as cardiovascular disease, high blood pressure and type 2 diabetes.i
But having a BMI of over 25 will usually not prevent you from buying life insurance, as insurers also take other weight-related factors into account such as your waist circumference, medical history and pre-existing medical conditions.
Depending on how high your BMI is, you might be required to have a medical assessment, and based on your perceived risk, may be offered cover at a higher premium or with exclusions imposed. Only in extreme cases is it likely that cover would be denied.
Am I too old to buy life insurance?
All life insurers have a maximum entry age, which in Australia typically ranges from 59 to 79 years old.ii
However, older applicants may not be eligible for all the benefits included in the cover, or for the maximum levels of cover.
All policies also have an expiry age, after which you’re no longer covered. In Australia, this typically ranges from 85 to 100 years old.ii
But given the purpose of buying life insurance is generally to ensure the financial security of your dependents and provide a payment which will cover your debts, it’s possible that in some circumstances some older people may no longer need life insurance. Seeking financial advice is best to ensure you have the cover suitable for your needs, whatever your life stage.
Can I get life insurance with a history of mental illness?
With almost a fifth of all Australians reporting having suffered from a mental or behavioural condition,iii mental illness is a relatively common occurrence and will not necessarily prevent you from buying life insurance.
When assessing your application, insurance companies will consider the severity of your condition and whether you’re fully recovered. If your condition is current, management of the condition and the effectiveness of treatment will also be taken into account.iv
In severe cases, you may be declined insurance, although different companies have different underwriting criteria so it pays to shop around.
Can I apply as a non-smoker if I sneak a cigarette now and then?
The short answer to this question is no. Life insurers consider anyone who smokes cigarettes – regardless of the quantity – a smoker.v This definition also extends to people who smoke cigars, chew tobacco or use nicotine patches.v
Smokers can be charged much higher premiums than a non-smoker,v and your premiums can be impacted by how much you smoke and how long you’ve been smoking, as these factors increase your risk of serious illness or death.v
In order to be classified a non-smoker, you need to have not used any nicotine product in the past year.v The good news is that if you’re able to do this, you could qualify for a reduction in your premiums.v
It’s important not to lie about your smoking status as, in the event of a claim, your insurer could deny your claim if they can prove you’ve lied.
Can I leave the money to someone other than my spouse?
As long as they’re aged over 18, there are no rules as to who you can nominate as your life insurance beneficiary.vi
You can also nominate more than one beneficiary if you choose, and specify what percentage of the payment you want each person to receive.
The life insurance available through super is typically bought on a group basis meaning it usually guarantees you cover without taking into account your specific circumstances.vii For more things to consider when deciding to purchase insurance through your super or outside of it, read here.
The amount of insurance cover you may want or need will change as your life does. Review our Wealth Protection Policy to learn more about the approach we take when working with people to determine recommendations.
We can help you find insurance coverage that is appropriate for your individual circumstances and needs.
If you want to learn more about how you can plan to make the best future for you get in touch with the financial experts at Invest Blue today.
What you need to know
This information is provided by Invest Blue Pty Ltd (ABN 91 100 874 744). The information contained in this article is of general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regards to those matters and seek personal financial, tax and/or legal advice prior to acting on this information. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relations to products and services provided to you.
i Australian Institute of Health and Welfare, https://www.aihw.gov.au/reports-statistics/behaviours-risk-factors/overweight-obesity/about
ii Finder, Life insurance for over 70’s, https://www.finder.com.au/life-insurance-for-over-70
iii Australian Bureau of Statistics, National Health Survey: First Results, 2014-15, mental and behavioural conditions, http://www.abs.gov.au/ausstats/abs@.nsf/Lookup/by Subject/4364.0.55.001~2014-15~Main Features~Mental and behavioural conditions~32
iv Mental illness and life insurance, what you need to know – a detailed guide, pg 3, https://www.psychology.org.au/Assets/Files/Mental-illness-and-life-insurance-detailed-guide.pdf
v Finder, Regular smokers and life insurance, https://www.finder.com.au/regular-smokers-and-life-insurance
vi Finder, Updating life insurance beneficiaries, https://www.finder.com.au/updating-life-insurance-beneficiaries
vii Moneysmart, Insurance through super, https://www.moneysmart.gov.au/superannuation-and-retirement/how-super-works/insurance-through-super
© AMP Life Limited.
First published 06 September 2017