The answer is that it depends what you are doing!
If you are establishing policies to protect your finances in the event of death, long term sickness or the diagnosis of a critical illness such as a heart attack, stroke or cancer, then a healthy lifestyle will usually result in acceptance on standard terms. However, a history of medical issues either personally or with blood relatives could mean that the insurance company can choose to decline or defer the cover – or charge more for it.
Other factors which may affect any terms can include occupation, hobbies, smoking habits and height and weight.
In recent years some product providers have introduced incentives for undertaking regular exercise and undergoing health checks, with those policyholders who fulfil the policy’s conditions paying less over the term of the policy than those who don’t. Other “perks” of this type of plan can include discounts on gym memberships, healthy food, spa days and pedal cycles.
Sometimes cover can be offered without the need for a medical examination, but this depends on the age of the applicant, the size and type of cover as well as the term of the policy – plus the other personal details mentioned above.
Here at Chancellor we have had a couple of instances where serious medical issues have been picked up during some tests of medical examinations which were required as part of the “underwriting” process. Whilst cover could not be provided in these circumstances, the applicant was able to seek long term medical help for something that they may never have known about if they hadn’t applied for the policy in the first place.
So, when does an unhealthy lifestyle or a history of medical problems mean higher income? If someone buys a conventional lifetime annuity at retirement with their pension fund and they have adverse family history, live in a postcode area where the average life expectancy is lower than average, they smoke a certain amount or have medical problems themselves, the annuity provider may pay a higher level of retirement income. The bad news is that the annuity company expects that the annuitant won’t live as long as average statistics would indicate – so the payments will be made over a shorter period to compensate – so it wouldn’t be wise to start smoking or putting on weight or move to a different postcode area just to get a higher pension!
Saying that, many retirees now choose to draw their retirement income using Flexi Access Drawdown (FAD) that was only fully introduced as recently as 2015. Lifestyle, smoking habits, postcode and general health play no part in the income that can be taken from this type of plan. FAD isn’t for everyone as it will involve risks and ongoing costs which may not be suitable for some clients. Financial advice is highly recommended for anyone contemplating this approach.
At Chancellor a big part of what we do is advising our clients to put in place policies to protect them or their families against death, disability, diagnosis of a critical illness or long-term sickness. Most people’s initial reaction is just that – “It won’t happen to me”
Thankfully health issues resulting in a claim for disability, sickness or critical illness may not occur but as Benjamin Franklin once wrote “in this world nothing can be said to be certain except death and taxes”. Not, therefore, a case of “if” – but “when”.
Recently Chancellor’s Chartered Financial Planner, Ed Painter, was driving to the office when a part of a wagon flicked up and embedded itself in the bonnet and engine bulkhead of Ed’s car just in front of his steering wheel. We are delighted to confirm that Ed was uninjured but a few inches higher and the outcome could have been so much worse. Half an hour earlier Ed would not have imagined this happening on a normal journey to work on the UK motorway system. Whilst it isn’t for the faint hearted, a photo of the piece of metal – which was around two feet long , can be found below:-