Your Life Insurance Premuims Could Rise Through Smoking, Drinking Or Ill-health
If you have a family history of poor health or if you drink or smoke excessivly you might be under the false impression that critical illness cover or life insurance cover may be extortionately expensive. A manager at Scottish Mutual, Mr X, says this is rarelythe case, “Some of those eating ‘too much’,excessive drinking or heavy smoking may well shy from protection for fear of being unfairly penalised for their nasty habits. Therefore, they will most likely find that these essential forms of financial protection cost even less than they thought.”
Mr X a specialist re-insurer, says only 25 % of the working population have life insurance cover and only 20 per cent have CIC, even though it is generally deemed that if you are employed and/or have dependants and a mortgage, this safety is essential. Many, many people are taking prohibative risks.
If a person were to die their life insurance policy will pay out on death and hopefully will be enough to repay the mortgage, and/or provide any dependants with financial security. In the case of critical illness insuranceit administers a dividend and helps at this time. Even though medicine is improving all the time and people are getting better from life-threatening illness, they are usually unable to work temporarily or are forced to stop completely; this is when a tax-free lump sum can create the financial security needed.
If a person does drink or smoke premiums will be higher but they do vary a lot between one insurer and another. And they also vary between CIC and life cover. FriendsProvident doesn’t raise premiums until a person is consuming the equivalent of 4 pints daily. For a non-smoking 35year old, consuming less than 45 units weekly, for 100,000 pounds of life insurance cover, the standard rate is 17.90 pounds per month. If you drink between 45 and 65 units weekly it increases to 28 pounds per month.
In comparison, it will cost a 25 yr old non-smoker 18.70 pounds per month for 100,000 pounds of critical illness cover . For a smoker this increases to 32.70 pounds monthly, but the premium only rises again if you smoke more than 2 pkts per day.
**A family history of conditions such heart disease or diabetes does not mean that the insurance payments will be considerably higher. A 36 year old banker, Mr X, comes from a family that has a lot of members suffering from high blood pressure although his grandparents and his parents do not. Some time ago, he and his wife took out life insurance and CIC with Axa from Scottish Mutual, giving them a cover of 125,000 pounds. Their monthly insurance premium costs 38.50 pounds and Mr L was quite pleased that his families medical history didn’t change what they pay.
A director of Money Supermarket, Mr O, says if you cannot afford to do both, it is sensible to cover your mortgage with life insurance and then take out as much critical illness cover as is affordable.
”Any one who can afford it should have critical illness cover,” he says. “If you’ve got dependants you should have life insurance and critical illness cover. The only people who may not need critical illness are those with good, not just standard, employee benefits.”