Essentially, the adjustment means some overweight, TAL-insured people who had previously been accepted at the standard rates may now be charged premium loadings.
These loadings will increase as a customer’s rating on the TAL BMI table rises – that is, the more overweight they are, the higher their life insurance premiums will be.
What is BMI?
BMI, short for body mass index, is a tool used to evaluate the medical implications of a person’s weight compared to their height. It is calculated by dividing their weight in kilograms by their height in meters squared. The calculated number is then used to classify someone as either underweight, normal, overweight or obese.
According to the World Health Organisation, the international classification of these categories is as follows:
- < 18.5 underweight
- 5 – 24.9 healthy weight range
- 25 – 29.9 overweight
- >30 obese
Since people who are overweight or obese are at more risk of life-threatening health problems, insurers such as TAL can use a person’s BMI to price the risk of payout.
What TAL say about their adjustment
In the release announcing the changes, TAL said they hoped it would work as an incentive for people to get healthier.
“Unfortunately, Australia is at the forefront of the obesity problem and this represents a substantial health, societal and financial issue for all Australians,” TAL said in a statement.
“There will be opportunities for customers to have their medical loading for obesity reviewed.
“Customers should be paying the right price for their risk.”
General Manager of TAL’s Retail Distribution, Niall McConville said the Australian life insurance industry generally accepts overweight and obese customers at the same rates as healthy people.
“As an industry, we are continuously working towards long-term sustainability and there is an industry need to review what is classed as ‘standard’ risks,” he said.
“We believe in appropriately pricing risk, based on available evidence, to ensure our ability to pay claims in the future.”
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What this means for the life insurance industry
Other life insurers will be likely to follow suit, so TAL’s changes could have broad effects on many people.
How many is “many people”?
Well, with the Australian Health Survey in 2011-12 finding 63.4 percent of Australians aged over 18 overweight or obese (according to their BMIs), this could translate to a lot of us being affected. In 1995 this rate was 56.3 percent, which demonstrates how much the issue of obesity has grown in this country.
Hopefully the changes will help reverse this trend by working as an incentive for people to get healthier, as TAL put it.
You can calculate your BMI on TAL’s website here.