Life insurers take into account a number of different factors when assessing insurance applications, but asking your insurer about the impact these factors might have can sometimes be difficult.
Here are the answers to some commonly held – but seldom asked – questions you might have about your ability to buy life insurance.
Am I too overweight to buy life insurance?
Life insurance applications ask for your height and weight, and insurers typically use a measure known as Body Mass Index (BMI) – which is calculated by dividing your weight in kilograms by your height in metres squared – to assess whether you are overweight.
A BMI of less than 18.5 is considered underweight, with 18.5-24.9 classified as a healthy weight range. Anything over 25 is considered overweight1.
People who are overweight have higher rates of death and illness than people of healthy weight, and are more susceptible to conditions such as cardiovascular disease, high blood pressure and type 2 diabetes2.
But having a BMI of over 25 will usually not prevent you from buying life insurance, as insurers also take other weight-related factors into account such as your waist circumference, medical history and pre-existing medical conditions.
Depending on how high your BMI is, you might be required to have a medical assessment, and based on your perceived risk, may be offered cover at a higher premium or with exclusions imposed. Only in extreme cases is it likely that cover would be denied.
Am I too old to buy life insurance?
All life insurers have a maximum entry age, which in Australia typically ranges from 59 to 79 years old3.
However, older applicants may not be eligible for all the benefits included in the cover, or for the maximum levels of cover.
All policies also have an expiry age, after which you’re no longer covered. In Australia, this typically ranges from 85 to 100 years old4.
But given the purpose of buying life insurance is generally to ensure the financial security of your dependants and provide a payment which will cover your debts, it’s possible that in some circumstances some older people may no longer need life insurance. Seeking financial advice is best to ensure you have the cover suitable to your needs, whatever your life stage.
Can I get life insurance with a history of mental illness?
With almost a fifth of all Australians reporting having suffered from a mental or behavioural condition5, mental illness is a relatively common occurrence and will not necessarily prevent you from buying life insurance.
When assessing your application, insurance companies will consider the severity of your condition and whether you’re fully recovered. If your condition is current, management of the condition and the effectiveness of treatment will also be taken into account6.
In severe cases, you may be declined insurance, although different companies have different underwriting criteria so it pays to shop around.
Can I apply as a non-smoker if I sneak a cigarette now and then?
The short answer to this question is no. Life insurers consider anyone who smokes cigarettes – regardless of the quantity – a smoker7. This definition also extends to people who smoke cigars, chew tobacco or use nicotine patches8.
Smokers can be charged much higher premiums than non-smokers9, and your premiums can be impacted by how much you smoke and how long you’ve been smoking, as these factors increase your risk of serious illness or death10.
In order to be classified a non-smoker, you need to have not used any nicotine product in the past year11. The good news is that if you’re able to do this, you could qualify for a reduction in your premiums12.
It’s important not to lie about your smoking status as, in the event of a claim, your insurer could deny your claim if they can prove you’ve lied.
Can I leave the money to someone other than my spouse?
As long as they’re aged over 18, there are no rules as to who you can nominate as your life insurance beneficiary13.
You can also nominate more than one beneficiary if you choose, and specify what percentage of the payment you want each person to receive.
The life insurance available through super is typically bought on a group basis meaning it usually guarantees you cover without taking into account your specific circumstances14.
So if one or more of the situations above applies to you, opting for life insurance through your super may be the easiest and most cost-effective way to get cover.
Finally, the best person to help find insurance cover for individual circumstances and needs is a financial adviser. If you don’t have a financial adviser, our find an adviser tool can help you locate one in your area.
3, 4 Finder, Life insurance for over 70’s
5 Australian Bureau of Statistics, National Health Survey: First Results, 2014-15, mental and behavioural conditions
7, 8, 9, 10, 11, 12 Finder, Regular smokers and life insurance
13 Finder, Updating life insurance beneficiaries
14 Moneysmart, Insurance through super
Everyone’s different, so the cover you require will depend on multiple factors.