Most of us are all familiar with the famous quote from Greek philosopher Heraclitus, “The only thing that is constant is change”.
The changes occurring with technology alone is scary enough, let alone all the other changes affecting the world today.
I read an article online the other day that was more disappointing than surprising. It mentioned that in Japan, the most popular family meal that is now served at Christmas time is KFC. A nation that prides itself on history and honour with a cuisine of its own that is highly regarded, has become the latest victim of the global fast food epidemic.
One change that is becoming more obvious on a global scale, however, in Australia is our problem relating to obesity. This is particularly relevant to our industry given the additional roadblocks that exist when providing life insurance advice. Some recent data has shown that around 60 per cent of adult Australians and 25 per cent of children aged between two and sixteen were classified as overweight or obese.
All you knowledgeable risk advisers in the industry are aware that the higher someone’s body mass index (BMI), the higher the risk of cancer, heart disease or diabetes. This is common knowledge among the life insurance industry, but not so much within the general community.
Thankfully, the industry has adapted to the issue and provided improved BMI parameters leading to a reduction in policy loadings going forward for new applicants. I know of at least one insurer happy to offer borderline standard rates on life cover with a BMI of 38. This wouldn’t have been the case a few years ago.
Life insurers such as AIA, Asteron and TAL are doing their bit to reward new applicants and existing policyholders who want to look after their health. They realise that it is a win-win for both client and insurer over the long term through cheaper premiums and reduced claims.
As advisers, we know how challenging it can be sometimes to try and convince individuals and families of the importance of adequate insurance cover. Even at standard rates, the discussions involving costs and affordability can be challenging, so naturally we feel like pulling our hair out when we hear the words ‘premium loading’.
Once again, education is needed for the clients or prospects that we come across when discussing life insurance. Generally speaking and with few exceptions, most people who are overweight usually continue to gradually gain weight unless they change their habits or lifestyle. From an insurance perspective and going on BMI alone, the longer someone waits to arrange their insurance, the higher the expected loading or premium cost for those who are overweight.
We also know that associated illness such as cancer, heart disease and diabetes will either prevent someone from qualifying for cover or make it extremely expensive to obtain cover. As advisers, it is now up to us to highlight these facts and communicate to the market or any potential clients, so they too are aware of the risks. The advantage of doing so is twofold.
First, by communicating this information to our market, the consumer is better informed to make a decision and will be less likely to procrastinate if there is a need. This would therefore enable more people to obtain valuable cover sooner rather than later, given that loadings or even a decline may have been evident down the track.
The next advantage relates to the advisers and businesses in our industry who would improve their take-up rates. You would think that having detailed discussions with clients and prospects about their own circumstances, particularly if they already have BMI issues, would prompt them to seriously considering their insurance cover needs right away.
As an industry or as advisers, let’s not keep this information to ourselves. Both client and adviser can benefit from understanding the risks associated with obesity and I feel we have a moral obligation to raise this topic for the good of the community.
Tom George is a life insurance adviser for DMA Financial Strategists
