Fat Tax For Life Insurance

A new “fat tax” is being introduced by insurers to punish the obese. The cost of seriously overweight customers will be up to 50% higher when taking out new life insurance policies, the threshold at which the higher rate begins is also going to be lowered.

A new “fat tax” is being introduced by insurers to punish the obese. The cost of seriously overweight customers will be up to 50% higher when taking out new life insurance policies, the threshold at which the higher rate begins is also going to be lowered.

Legal & General, Britain’s biggest life insurer, has confirmed that 13% of new life insurance applicants are facing increased premiums, which currently apply to anyone who has a body mass index of over 30, which is the point people are classified as medically obese.

People with a body mass index of over 30 can face up to a 400% rise in their policy price depending on the insurer’s terms, other high risk categories such as smokers or people with existing or previous medical conditions will also face a hike in price.

For example a 55 year old man who is a healthy, average weight non-smoker will pay approximately £1,000 per year for a £150,000 life insurance policy. If the same man were obese the annual price on a 25 year policy will cost up to an extra £500 per year.

Britain is currently experiencing an epidemic of obesity, weight problems can lead to cancer, heart problems, diabetes and liver disease. 16% of children and a quarter of adults have weight problems which threaten their health, last year doctors wrote more than a million prescriptions for obesity drugs, compared with 127,000 in 1999.

Legal & General’s director of underwriting and claims, Russ Whitworth, said: "Most people understand that poor diet and lack of exercise can lead to health problems but they might not realise that being significantly overweight would also make their life insurance more expensive.

"Although it is not an exact science, we find that BMI is the best indicator of the risk of being overweight, so it pays to stay in shape."

Other insurers have also confirmed they charge up to 50% extra for their cheap life insurance policies. Norwich Union, the UK’s second largest life insurer, admits it raises life insurance premiums once people’s body mass indexes hit 35. Friends Provident, the third largest life insurance premium, begins to increase policy prices when the body mass index is over 33.

A spokesman for Association of British Insurers said: "If you are obese, you are at greater risk of contracting certain diseases. It is just the same as increasing the premium for a smoker or somebody with previous medical conditions."

Endless details are required by life insurance applicants, including their exact weight and height. If you lie to keep the price of your policy down you will face strict consequences from your insurer when you are caught. Your policy may even be invalidated and your insurer is unlikely to pay out if you are classified as obese but do not tell your insurer when taking out your policy.

In a recent case, a 37 year old man told his insurer when taking out his policy that he was 6 foot tall and weighed 16 stone. Five months later he died of a blood clot, but his life insurance claim was not valid because he was found to be 5 foot 9 inches and 21 stone. If his insurer had known his true weight and height his policy would have been increased by 275%.

Life insurance is a protection for your loved ones if something happens to you, it is therefore important, for the sake of your family, to be totally honest when taking your life insurance policy out.