Should low income earners pay more for their life insurance?

Technically, yes!

It is a grim fact that men classified as having ‘low income’ will die on average 6.5 years younger than higher earners.  And for women, this gap is 4.7 years.

This means that low income men and women are at higher risk for life insurance… in the same way that smokers are higher risk for life insurers… and low earners (technically) like smokers should pay more for their life insurance cover.

I started thinking about this issue when a report from Otago University caught my eye.

According to this report, the life expectancy gap between rich and poor in New Zealand is not only significant, it’s widening! Over the 20-year period from 1981 to 2001, life expectancy for high earning men increased by 2.1 years and by 1.4 years for women.

So, do we believe that life insurance companies in New Zealand will at some point introduce a question on the Life Insurance application form along the lines… “How much do you earn?”

Nope, never!  (And nor should we.)

Yet… (believe it or not) it does happen in some countries… South Africa being a case in point.

If you apply for life insurance in South Africa, you will typically be asked to declare both your level of education and monthly income on the application form.  If your level of income and/or education is low, you’ll be quoted a higher price for your life insurance!

Talk about kicking someone when they’re down!  Tough place Africa.

The Sydney Morning Herald recently reported that a team of scientists at Boston University claimed to be able to predict – with 77 per cent accuracy – which of us will live to 100. (Also see NZ Herald)

The scientists did this by comparing the DNA of more than 1,000 centurions with that of the general population, finding a “genetic signature” that was linked to “exceptional longevity”.

What would happen if at some stage people are able to be “longevity tested”? What would happen if you knew that, failing an accident or a natural disaster, you’re likely to live to be 100?

And in particular, how would it affect your application for life insurance???

Standard life insurance premiums are based on the expectation that your lifespan will be that of the average person… in New Zealand that’s 82.2years if you’re female and 78.0years if you’re male. When you apply for life insurance, the insurer will ask you a range of questions to assess if you’re likely to die earlier than an “average” person of your age and gender.  If you are, you’ll be charged higher (loaded) premiums.

But Life Insurance companies typically don’t have processes to check if you’re likely to live longer than average… with a view to reducing your premiums.

So if you turned up at an insurance company with a favourable DNA test, you’d still pay the ‘standard’ rate.

Not fair, is it?

Ok, I always thought that getting a lot of sleep was one of the ways to a long and healthy life.

Not so, according to this report on BBC.

The bottom line is this… scientists at the University of California have established that sleeping for 6 or 7 hours a night is better than 8 or more hours, if your goal is to live longer.

As a person working in life insurance, my ears pricked up when I heard this. You see, if you think about it, this study says that people who sleep longer than average are more likely to die younger than average and this means they are a higher risk for buying life insurance.

And how do insurers deal with higher risk applicants?  Higher premiums of course.

So how about a new question introduced onto life insurance applications asking how long you sleep for on average each night. Less than 8 hours means you get offered life insurance at the standard price. Eight or more hours and you’ll get an instant loading on your insurance premiums.

Hmmm.  Makes you think.

This is a great way to start the year. It could even be your New Year resolution.

A couple of months ago we came came across this NZ Herald article that offered sensational new advice on how to live longer.

The advice is based on research that says “people treated unfairly at work who suffer in silence have twice the risk of a heart attack or dying of heart disease compared with those who vent their anger”. This is in line with what doctors have long believed; that unresolved anger can impact your health.

Conversely, if you get mad and let off a little steam every once in a while, you’re likely to live longer.

Why is this important for the life insurance industry?

Well… if everyone can live just a year or two year longer, this will be very good for insurance companies and consequently, will lower life insurance premiums. Imagine that!

The research.

The research that has underpinned this advice is published in the Journal of Epidemiology and Community Health.

Swedish researchers from the University of Stockholm followed 2755 male workers from the early 1990s to 2003. They took a range of measurements, including blood pressure, body mass index and cholesterol levels, and asked the men how they coped with unfair treatment or conflict at work. They recorded whether the workers used avoidance tactics, such as walking away from a situation, and whether they suffered headaches or other physical symptoms. There were 47 deaths from heart attack or heart disease in the group over the 10 years. After correcting for the degree of job strain the men were under, and biological factors, they found those who persistently bottled up their anger rather than expressing it openly were more than twice as likely to suffer from heart attacks or heart disease.

It’s only reasonable, therefore, that we should be allowed to rant at work. Shout at your boss. Yell at your colleagues. Let off steam.

Get mad.

Live longer.

Much longer.

We all know Christmas can be a stressful time. Family obligations, financial pressures and excess consumption all lend themselves to an insurance claim. We thought we’d give you some insightful hints on how to deal with all this Santa stress.

Ms Clause

A happy Ms Clause makes for a stressfree Santa. Hints… don’t mention the word dry and turkey in the same sentence, do the dishes before you’re asked, don’t make her play cricket, and when she does:- don’t laugh at her inability to catch, bat or understand the purpose of the game. If this is all done right… it may even lead to a little Ho Ho Ho (keeping her wine glass full helps)

Chimney squats

So you’ve been squatting in front of the chimney for the last 12 hours trying to assemble the latest toy for the little elf. Your Chinese is much improved, but clearly not good enough to read a set of instructions. Your thigh muscles are burning, the vital piece seems to be missing, your fore-arm is aching with screw-driver overuse and now Ms Clause is now offering her advice (a bottle of wine will help interpret the Chinese)

In-law sprints

Just the thought of the in-laws gives you angina, and they’re always the first to arrive. So get your head down and sprint in the opposite direction. The longer the sprint, the better the chance of getting your heart rate up and lowering your stress levels. Be thankful for the food, the company and the fact that you only have to see them once a year. (To help, scull a glass of wine as their car enters the driveway)

Managing elves

For once, give them what they asked for… not what’s good for them. Educational toys suck. Make sure you have the batteries and earplugs (also helpful for in-law chatter). Sharing is NOT caring. (a full wine glass also helps your 5am start )

Christmas Carrols don’t rock

It all starts in November with the first Christmas advert.. then the cacophony of endless carols heard at prize-giving, retail shopping, radio stations, TV adverts, banner-ads and soon you’re dreaming for silent nights. Jingle bells don’t rock and Reindeers don’t have red noses or fly. (You need more than a glass of wine for George Michael’s last Christmas)

So if you don’t need the Santa stress, and to keep our claims down, stay at home and buy online.

Couldn’t help commenting on a not-so-politically-correct story in the Herald the other day by Deborah Coddington about…

o—b—e—s—i—t—y.  

According to Deborah, John Birkbeck, a professor in human nutrition from Massey University told a journalist “You can’t get over-fat without eating more calories than you expend.”

Seems this wasn’t the PC thing to say.  Anyway… that’s not what I want to talk about.

Deborah’s article goes on to say how we dance around the ‘fat’ issue so as not to hurt people’s feelings but we don’t mind confronting people head on when it comes to charging higher life insurance premiums.

Whilst we’re happy to discriminate against all and sundry… we’re way too PC to discriminate against obesity.

Well I’m here to tell you that Life Insurance is the great leveller. You see, it’s all about mortality statistics, and the fact is, obese people die earlier.

So yes, WE DO CHARGE MORE if you are, ahem, short for your weight.

And because we have statistics to back up our pricing, it’s NOT discrimination.

Finally… how do we work out what premiums to charge?  We ask you on your insurance application to tell us your height and weight then we sneakily work out your BMI. BMI stands for body mass index, calculated by taking your mass in kilograms and dividing it by the square of your height in metres. Generally a ‘healthy’ range is around 18.5 to 32. Higher than around 32 increases your mortality risk and attracts higher insurance premiums.

Saw this cool article in Time magazine that explains why women live around 3~6 years longer on average across the globe.

The issue for us life insurance guys is not so much why females live longer, but what female longevity means for life insurance. The short answer is that because women live longer, they pay lower life insurance premiums. Bugger.

So what can us mere men do about this? Are we doomed to paying higher premiums because of genetics? Well, according to the Time article, there is something we can do… basically research tells us that the 3~6 year gap is only 30% genetics and 70% to do with environmental factors… the factors us men can actually control.  And let’s face it – there is little that men control these days so this is a very, very good thing!

So what are these controllable factors that cause men to die earlier than women? Apparently there are three…

• Men smoke more (although this gap is closing)
• Men eat more… particularly the foods that increase cholesterol
• Men deal with stress by internalising it rather than letting go the way women do.

 And that’s pretty much it. These three behaviours account for around 2~4 years of our truncated lives.

And that’s why we (us men) pay more for life insurance!!! Go figure.

On the subject of longevity, thought it appropriate for the festive season to post some tips on how to combine living longer with having fun… borrowed from website about.com.

1. Be Positive  Don’t fret about getting old. Have a positive attitude about aging and thios can add more than seven years to your life.

2. Smile  Smiling can change your attitude. It’s a great way to connect with people, change your outlook and counteract the effects of stress.

3. Drink Red Wine  Packed with antioxidants which protect your body against aging, but only if you stop at 2 glasses a day.

4. Solve Puzzles and Play Brain Games  Mind games are a great way to stay engaged, exercise your mind and entice your curiosity.

5. Eat Dark Chocolate  Like red wine, chocolate contains antioxidants. Choose quality dark chocolate and don’t binge… have a bit of it each day.

6. Have More Sex  What do you want me to say?

7. Make Exercise Play  What do you want me to say?

8. Sleep  Essential. Most people don’t get enough. Get 7 to 9 hours a night.

9. Spend Time With Loved Ones  Being connected means protection from loneliness, depression, and mental illness.

10. Relax Practice daily relaxation techniques and train yourself to turn off your stress. Replace it with calm energy.

I just checked these 10 tips with my partner and she told me I absolutely don’t get it. 

“Boring BS” to be precise… who cares about living longer???  It’s not about how long you live (unless you’re in the business of life insurance)… it’s about how much fun you can pack into the few years you have.”  “Just be present to each and every moment and laugh as much as you can”.

So there you have it…  clearly I shouldn’t have gone anywhere near this topic. 

Steve and I wish our readers a wonderful festive season.  Stay safe.  

Don’t shoot me I’m just the messenger here!

I’m only reporting what Canadian psychologist Stanley Coren had to say in his 1992 book – The Left-Handed Syndrome. He reported that left-handers, on average, lived about 10 years less than right-handers do. That’s what his data showed, but clearly no answers regarding why this would be so.

Now that’s a pretty serious statistic. If I was a ‘leftie’ I’d be dashing off to buy a life insurance policy. In fact, I’d buy it right now, online, so as not to lose a moment of my precious, remaining time.

So why don’t lefties rush off to buy life insurance?  They would be getting a bargain price relative to ‘righties’ and clearly they have the greater need.

And why too don’t life insurance companies have different premium rates for lefties?

Answer:  Because (by all accounts) Stanley Coren’s data was bulls#1t.

In 1993 scientists at the National Institutes of Health and Harvard University co-authored a study that showed no statistical difference in longevity between lefties and righties and that Coren’s study had been flawed.  

So don’t hold your breath waiting for a question on the old life insurance application asking which hand you use to sign your life away (so to speak)?

Eat fish… live longer.  Another plug for longevity.

Couldn’t resist taking this photo… seen on Remuera Road, Auckland… 

Good on yer Fishmonger, a godsend for life insurers the world over!