A few years ago I wrote a blog about obesity, the conventional wisdom being that obesity is bad for you… in fact it’s likely to kill you. That’s what all the studies show. And because the statistics show that you’re likely to die earlier than an ‘average’ person in the population, you’ll be charged more for life insurance. All perfectly logical.

But now I’m confused.

A recent Canadian study (reported here) concluded that people who are overweight live longer than people who are classified as “normal” weight. Not only that, but people who are classified as ‘significantly’ overweight also live longer.

The study of nearly 12,000 people, led by Statistics Canada’s Heather Orpana, was devised to estimate the relationship between body mass index and mortality in Canadian adults.

Results…

• Being overweight was associated with a 25-per-cent lower risk of dying
• Being obese was associated with a 12-per-cent lower risk of dying.
• The risk of dying for a morbidly obese person was statistically the same as the risk for people of “normal” weight.
• Underweight men are at greater risk than any other weight group.

Was this a once-off study with flawed results? It appears not.

In 2005, research undertaken by the US Center for Disease Control and Prevention published a study with similar findings. (At the time prominent health experts were outraged.)

So, if this research is indeed true, what does this mean for life insurance?

The simple answer is that overweight people would get cheaper life insurance premiums.

Imagine that.

An insurance joker once professed, “Insurance employees don’t need titles on their business cards; white shirts actuarial, blue shirts marketing, black shirts underwriting”. Underwriters are viewed as the morgue of an insurance company, “the policy prevention department” as my business partner once put it. Assessing individual mortality is part science and part luck. But the advances made in genome sequence are going tip the scales greatly towards the world of science.

The X Prize Foundation is offering US$10M to the first team to sequence the genomes of 100 centenarians.  In layman’s terms “find the genetic code for those that live beyond 100 years”.  The competition starts Jan 2013, and the sequencing has to take place in 30 days.  The competition aim is two-fold. First, find a way in which genomes can be sequenced accurately in a relative short period of time, second, determine what genetic pool is consistent with longevity. No easy task apparently (read the article in the economist for more info).

Back to the black shirt underwriters. The ability to sequence genomes quickly will make the cost of getting a report on an individual’s DNA make-up much more affordable. A hair sample will give an underwriter an accurate description of the likelihood of all or any serious alignments that may linger, and a much better view of longevity. No more blood or urine tests; simply send a hair sample and with-in minutes the underwriter will have a health assessment waiting on their PC with the aid of some ingenious piece of software. The push to economise genome sequencing is going to revolutionise the underwriting world, and my pick is it is going to happen a lot quicker than underwriters are prepared for.  Resistance to change will fall by the wayside when their masters learn of the cost savings to be made, and the improved outcomes these new techniques will deliver, particularly when underwriting for critical Illness and disability products.

The tag-line of the future?……  Life insurance premiums as unique as your DNA

Life insurance can be murder…

People buy life insurance, why? So that if they die unexpectedly, they’ll leave loved ones a bucket of money to keep them going. It’s simple really.

But what if the insured person doesn’t die unexpectedly?

It seems that sometimes ‘loved ones’ are capable of providing a little help.

Here’s a story from South Carolina, US, where a woman was charged with murdering her ex-husband, her stepmother and her two sons no less – all for the life insurance money.

Is there a moral in this? Not sure. But if you’re looking to take out a life insurance policy, at least make sure your beneficiaries are truly your loved ones.

Insightful question received from a reader…

Q

I would love to buy life insurance but I have one concern. If insurers cover you until you are 100 years old, there’s a 100% chance the insurance company will have to pay you the amount you are covered for.

I have put together a spreadsheet with a $30/month payment and interest at 8% pa. I could not save even $250,000 in 50 years, whereas if I die, the insurance company would have to pay out $420,000 – the amount I covered myself for.

What am I missing here?  How come the insurance companies don’t go broke?

Thanks, Roxanne.

A

Thanks for this Roxanne.

There are a few things that you haven’t factored into your spreadsheet.

Firstly, a life insurance policy that covers you until you are 100 years old would have a monthly premium that increases each year.  This annual price increase takes into account the fact that your risk of dying increases each year, as you age. In the first year you may be paying $30/month but after say 20 years you would be paying something like $200/month. So you’ll need to factor this annual increase into your spreadsheet numbers.

Secondly, a large proportion of people taking out life insurance cancel their policy long before they die.  Life insurance is like car insurance in some ways… you only need car insurance while you have a car. Once you sell your car, you can stop paying the insurance and cancel your policy.

Most people don’t continue with their policy past age 75. Besides the fact that it gets very expensive, the purpose of life insurance is to financially protect those people that are dependent on you. By the time you are 60 or 70, most people don’t have financial dependants – their children generally have their own income. So they no longer need the insurance and they stop paying.

That’s insurance for you… collecting premiums from the many, only to end up paying the few.

Great business:-)

Movember is an annual, month-long celebration of the moustache, highlighting men’s health issues, specifically prostate cancer and depression in men.

Who can we blame for this initiative?

Look no further than the Movember Foundation – a global not-for-profit, charitable organisation which runs this Movember celebration of men’s health.

For the record, the idea for Movember came about in 2003 when a few mates having a beer in a Melbourne pub recognised that men were lacking a way to adequately promote men’s health and came up with the idea to bring the moustache back for one month, and in doing so, have some fun, raise money and hopefully encourage men to talk about their health.

So why are we talking about Movember on a life insurance blog???

Because we in the life insurance business are impacted by the very health issues highlighted by this initiative – particularly prostate cancer.

Did you know?…

• Prostate cancer is the most common cause of cancer-related death in men (3.8%) behind lung cancer (6.1%) and bowel cancer (4%)
• In NZ, around 2000 to 3000 men are diagnosed with prostate cancer each year.
• There are generally no early warning symptoms for prostate cancer
• All men over the age of 50 are at risk of prostate cancer and should be tested annually
• If you have a history of prostate cancer in your family you should have tests from age 40
• Prostate cancer is curable if detected and treated early
• Men are not bullet proof. (Yep, it’s true… men get cancer too)
• You can get a Cancer Cover policy online that pays you a lump sum up to $250,000 if you’re diagnosed with cancer.

Do you exercise for at least 15 mins per day??

Yes?

Then (in a perfect world obviously) you should be entitled to a 14% discount on your life insurance premiums!!

A research study briefing in Time Magazine says that just 15 minutes of exercise each day increased your life expectancy by 3 years and reduced your risk of dying by 14%.

Research was conducted on 400,000 Taiwanese people over a period of 3 years, and the study compared people who undertook on average 15 minutes of exercise per day with people who were inactive.

Whilst we’ve known for a long time that exercise is good for your health, the specific relationship between ‘minutes of exercise’ and ‘years of longevity’ has not been that well researched.

With this type of information now emerging, I would not be surprised if in years to come life insurance companies start asking about your exercise habits before either quoting a price or issuing you a policy.

Watch this space.

It would be remiss of me not to write an article about the Rugby World Cup, and life insurance. How could I let such an opportune moment slide by without giving the lighter side of the important role sport events plays in our industry?

Let’s start with the car keys, that silver and brass jingle in your pocket (or so you thought), essential to getting back home in time to watch the replay. Statistics show, that your keys are the most likely item to be lost at a major sporting event. After a major sporting event, a stadium will receive on average 70 calls for lost keys. It may well be the levels of intoxication that predicate these lost keys. A study conducted by the University of Minnesota determined that one in every 12 fans leaves a major sporting event intoxicated.

It turns out that all types of motorists — not just pizza delivery drivers — are at risk on the roads after a major sports event. A study published by the New England Journal of Medicine tracked driving deaths on 27 consecutive Super Bowl Sundays discovered a 41% jump in the number of fatalities in the hours after the game than in the same time period on all other Sundays.

The study also reported that the number of crashes in the state of the losing team rose 68% after the game, compared with an increase of just 6% in the winner’s state.

So let’s keep the road fatalities down to an absolute minimum. …. Go The All Blacks!

…and click here to see what you’d pay for life insurance…

Just when you find out that relaxing is good for your health, you find out that ‘sitting’ is not one of the ways to do it.

You can read all about it here and here.  And to help you cut to the chase quickly, here are the two conclusions…

Study 1: Sitting and watching TV shortens your life by 22 minutes for every hour you spend glued to the screen.  This means people who watch TV on average 3 hours a day are likely to shorten their life expectancy by 2 to 3 years.

Study 2: People who sit more than 10 hours per day have a 48% higher risk of dying than people who sit for less than 4 hours per day. Since most people with desk jobs (like me) already sit around 6 to 8 hours per day at the office, that doesn’t leave much for driving and relaxing at home without taking your life into your hands.

OK.  So sitting is not only bad for you, it also appears to be a good predictor of how long you’ll live…. Which brings us to life insurance, which is what this blog’s about… remember?

You see, if we know that sitting is one of the factors that influences how long you’ll live, then surely this should also influence what you pay for life insurance. If you’re deemed to be a big-time sitter, you’re headed for an early grave and you should be charged more for your life insurance. Conversely, if you spend most of your time on your feet (eg a builder) then you should be charged less for your life insurance.

Here’s an idea

On your life insurance application, you’re typically asked if you participate in dangerous pastimes such as sky diving, base jumping, rock climbing, scuba diving and so on, because these pastimes are likely to reduce your lifespan.

So how about adding another dangerous pastime to this list… like ‘sitting’?

“Nothing?” Well that’s my answer… but of course, that’s just me because I’m probably naive.

However, insurance adviser Andrew Smith claims that the six steps to ‘get a girl’ also work a treat when it comes to selling life insurance. See the original article here.

According to Smith:

1. “Make her laugh – Smith says if you make your clients laugh, a lot of barriers are broken down.”

2. “Get her talking about herself – Smith believes once you start listening to a client, they open up more.”

3. “Be confident – don’t be the pussy cat… be the lion”, is Smiths advice. “If you are on a date and you’re not confident in your own abilities, the date will fail.”

4. “Be friends first. The girl will be expecting an ulterior motive to your date.  Be informative.  Smile. Be friendly. In insurance we are only after one thing really and in our terms… it is the sale.”

5. “Find out what’s important to her. It’s time for the “TED questions”. “Tell me more about your family?  Describe what would happen to them if you failed to come home from work next Monday”.

6. “Take her out for ice-cream. Sweetness releases endorphins and a feel good factor, the thought of which, makes a girl smile.” Every time Smith has a client he gives them a box of chocolates.

There are valuable lessons here for everyone.

When you’re next approached by an insurance salesman, you’ll know the drill by heart. Just hope it doesn’t get broken.

Or if you’re not into being seduced… get your insurance online…

September is Cervical Screening Awareness Month – the aim of which is to raise awareness about the benefits of cervical screening.

Why is cervical screening important to the world of life insurance? Because any positive action that individuals can take that contributes to detecting cancer at an early stage will ultimately result in less people dying from cancer.

Consider how cervical screening changes the odds…

So, with regular screening, women are 6 times less likely to either develop or die from cervical cancer.

Conclusions

• Get screened… sounds like a no-brainer!
• Take a look at cancer insurance… what have you got to lose???

(For more info see NZ National Screening Website http://www.nsu.govt.nz)