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Feeling the pinch

Obesity is something that has always impacted on premiums for protection products but due to the recent renewed public interest in this sensitive subject, it is a subject which is prompting increasing calls to the underwriting helpline.

Obesity is an issue that affects increasing numbers of the population and as a result it is becoming more relevant to financial advisers.

With a glut of new programmes such as Fat Nation and You Are What You Eat, nutrition is replacing interior design as the current lifestyle focus for the media.

This is good news for underwriters and advisers. As people become more aware of the issue, it becomes slightly easier for advisers and underwriters to tackle this very sensitive issue with clients.

If a client is obese, it will mean that they will pay more for critical illness and income protection cover. Traditionally non-disclosure has been an issue here.

People do not generally feel happy discussing their weight, let alone with their financial adviser. A recent survey has found that over half of all women do not always tell the truth about their weight. Advisers should bear this in mind and encourage clients to accurately report details such as height and weight when completing application forms.

From an underwriting perspective, Britain&#39s move tow-ards becoming a Fat Nation is something that cannot be ignored. Obesity has reached a point where it is claiming 30,000 lives annually in England.

Statistics show that many adults in England are overweight and around one in five are obese. Obesity is usually described as being 20 per cent or more above the recommended body weight.

People who are described as being morbidly obese tend to be at least 60 per cent more than their ideal body weight. Obesity and overweight substantially increases the risk of hypertension, cholesterol disorders, type 2 diabetes, coronary heart disease, stroke, gallbladder disease, osteo-arthritis, sleep apnoea and respiratory problems.

Morbid obesity has even greater health implications and greatly increases mortality (death) and morbidity (sickness). Permanent response to medical treatment for morbid obesity is rare and treatment by diet alone usually fails. From an underwriting perspective, the main points to consider are current height and weight; current blood pressure and any complications.

Obviously, all this information will not be available at the time of proposal, therefore, it is usual practice to ask the client to attend a medical or paramedical to assess the above. This is also common practice as weight details are often significantly under-disclosed at proposal stage.

Obesity in clients usually leads to a rating on their premium. Ratings for critical illness will usually be slightly higher than the life risk due to the increased incidence of heart attack, stroke etc associated with being overweight. Ratings for sickness insurance are again higher due to the increased morbidity risk. Interestingly, if the applicant is over 55, the rating would be slightly lower than the same height and weight rating for an applicant under 55.

An example of a rating would be 5ft 5 ins and 17 stone. This would attract a loading of +75 per cent on life cover, +100 per cent on critical illness and +150 per cent on income protection insurance.

Generally, where an applicant is greater than +100 per cent overweight for life cover, the insurer may choose to decline any additional benefits such as critical-illness or sickness-related benefits.

Obesity is a real issue affecting western society and it remains to be seen what the knock-on health issues will be. In the meantime, the inc-reased public awareness of the issue may help advisers ensure their clients accur-ately disclose their weight on application forms.

Matt Rann is head of underwriting at Scottish Equitable Protect


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