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June 23, 2010 Wednesday 12:03 AM EST
SECTION: PERSONAL FINANCE; Jennifer Openshaw
LENGTH: 880 words
HEADLINE: How to save money on life-insurance costs
BYLINE: Jennifer Openshawmailto:firstname.lastname@example.org
NEW YORK (MarketWatch) — When you’re paying for life insurance, you’d like to know you’re getting a financial break for slogging away on the treadmill or kicking the smoking habit.
“It’s called pragmatism,” said Byron Udell, chief executive of Accuquote. And underwriters are pragmatic, too, he said.
“All underwriters like to think they’re pragmatic,” Udell said. “It just depends on what conditions they’re comfortable with, and even the underwriter you get.”
Just as insurance companies use new research findings to tweak key life-insurance policy rating factors like weight and cholesterol — thus affecting the price you pay — so too can you use your own common sense to possibly bring down your insurance costs.
If you’ve got evidence to support a case for a healthy, longer life, why not show it? Even the time of year you buy life insurance may affect rates. Just as you can often get a good deal on a car in December as salespeople aim to meet year-end goals, the same logic applies to shopping for life insurance.
The Hartford is one company that recently announced some changes to be more pragmatic in how they categorize policyholders. For instance, now policyholders are assigned to one of three age groups, versus just two before.
And the company says it will now consider health factors that it hadn’t previously. Why the changes? “Because risk factors like blood pressure, cholesterol and even weight have much different predictability” regarding life span, said The Hartford’s Chief Medical Strategist Dr. Robert Pokorski.
When it comes to permanent or whole-life insurance, your bill can easily run $5,000 to $6,000 a year. So anything that might move you up from one class to another — classes typically are “standard,” “preferred” and “preferred plus” — can mean real savings. For its part, The Hartford says its changes will bump some new candidates into the preferred status, thus saving them hundreds of dollars a year over the standard rate.
Here are a few things you should know to be a more pragmatic life insurance buyer.
Don’t get the skinny?
Would you believe that being heavy can lead to a longer life?
“If you’re overweight or obese, you have a longer mortality rate than people with lower rate,” Pokorski said, pointing to a 2005 study in the Journal of the American Medical Association. “It’s thought to be predictive, like a bear going into hibernation who does better in winter because of the extra weight.”
It got me thinking about my own grandmother: thin, but a fall led to a broken hip, and ultimately she had a heart attack as she was recovering from surgery. The point is, being overweight alone won’t disqualify you from being assigned as a preferred risk, as it did in the past at The Hartford.
Still, “there are extremes that will prevent someone from being considered, regardless of any other factors,” said Robert DeMaille, a Hartford spokesman. “Examples of this might be someone who’s 5 feet 4 inches and 210 pounds, or 5 feet 4 inches and 90 pounds.”
Keep in mind that new variables — vascular age, for instance – are now in play. What’s vascular age, you ask? It’s the difference in the age of your arteries and your chronological age.
“A smoker could have arteries of a 70-year-old while someone at 50 exercising could have arteries of a 30-year old,” Pokorski said.
The Hartford says that while tests are not required in the underwriting process, they will consider your vascular age to possibly upgrade your status to preferred. You can measure your vascular age, or the amount of calcium in your arteries, through a CT angiogram.
Be your own cheerleader
What if you think you’ve got some healthy lifestyle that ought to be recognized? Toot your own horn.
“I did a stress test and a colonoscopy at 50,” said Accuquote’s Udell. “In some cases, they’ll require that information but even if not, bring forth any evidence that shows you’re healthy.”
Pokorski said that between 25% and 50% of applicants currently have stress test results in their medical file, which might enable an insurer to offer the applicant credit in their overall evaluation.
Watch the calendar
If you’re looking to get life insurance, when should you make the move? Consider the end of the year and often the middle of the year, Udell said.
“There’s a big push at the end of the year to get business done and to make exceptions that they may not do in October,” he said. “The pressure is on to get business: can we waive that doctor’s statement and just get the policy issued?”
Some insurance companies might have a similar midyear push, making June 30 another big goal line. All things being equal, the end of year or possibly midyear are better times to buy insurance.
Finally, what an insurance company is willing to do really depends on what they’re comfortable with and what underwriter you get. Udell said rates can also depend on the role of so-called reinsurance companies, which take on some of the insurance company’s risk.
Yes, it’s all about pragmatism. But you don’t have to wait to see an insurance company’s underwriting requirements to show your own pragmatism toward your longevity. If you’ve got evidence, make it known.
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