May

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remember to shop around for life insurance

Filed Under Uncategorized, insurance 

Did you know that if you’re a single man (as in unmarried / not in a civil partnership) you will typically be asked to take an HIV test if you wish to insure your own life for more than £300k?

For all women and married men, the relevant figure rises to £1m. As no data currently exists for men in civil partnerships (they haven’t been around long enough), some insurers will treat them as single men, and others as married - I’m not sure whether this does, or should contravene the anti-discrimination laws that exist in the UK.

Interesting, don’t you think?

As a relatively young, and healthy person, I sometimes forget that insurance is based on risk, and for life insurance, that risk increases if you are more likely to get sick. And if you are HIV positive, you are more likely to get sick (although the risk can normally be controlled by medication at the right stage). But similarly, if you’re older, you are more likely to get sick. Or if you have an *interesting* medical history.

Life insurance is a relatively straightforward product though. It’s pretty clear cut when someone is dead (as in, there’s a death certificate) and all that happens then is that the sum assured is paid out. This means that life insurance is a easy to shop around on. Now, this is important if, like me, there’s nothing particularly special about you but it’s even more so, if you have any (perceived) risk factors.

So, if you’re thinking about taking out life insurance, shop around. Don’t attempt to defraud insurers by neglecting to mention relevant information if asked, but also, if you think that a certain requirement is too onerous (like taking, and disclosing the results of, an HIV or Hepatitis test), it’s perfectly possible that another company won’t have it.

Image by Jan the manson

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Comments

4 Responses to “remember to shop around for life insurance”

  1. Mrs. Micah on May 1st, 2008 12:17 pm

    This got me thinking about statistics. Perhaps….perhaps most young unattached (married, partnered) men don’t want to buy life insurance unless they think they’re going to die sometime. Because they don’t have anyone to take care of and because they don’t think they’re going to die soon.

    Therefore, insurance companies reason, one big motivator would be terminal illness.

    Just a guess.

  2. plonkee on May 1st, 2008 12:29 pm

    That might be the case. I’m not sure whether the data actuaries use is based on the outcomes of people with life insurance, or just people in general. Statistics are funny things anyway.

  3. Julie on May 4th, 2008 11:40 pm

    I’m pretty sure the data we use is based on everyone. Personally, I don’t think that any young, unattached men or women should be wasting their money on life insurance… and most insurance companies *agree* in the respect that we’re suspicious if these people come to us asking for big policies.

    - an actuary!

  4. Andrew Stevens on May 5th, 2008 3:31 am

    Actuaries usually use statistics for mortality based on their own company’s experience, so long as their company has enough experience for the data to be credible. (Credibility is a mathematical term here.) The reason a company uses its own experience, rather than general insured populations or the general population is because each company has different methods of underwriting (i.e. deciding what risk class and premium a particular person is in).

    Julie is correct about the suspicion of young unmarried men coming in asking for big policies. Unmarried men are much more likely to be HIV risks than married people or unmarried women. (This is a statistical fact and likely to do with the high HIV incidence among homosexual men and IV drug users, both groups more likely to be single men.)

    I’m also a big proponent of shopping around based on price for term life insurance. If you’re in the market for other products (for estate planning reasons), companies typically compete in many other areas besides price so you want to be more thorough for those products and consider every policy in toto. But a term policy is pretty much a term policy and the insurance companies compete pretty much exclusively on price (thereby making it a low profit product for the company). By all means a consumer should take advantage of this.

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