As summer quickly approaches we all see the increased ads for getting that summer body bathing suit ready. Now, the target for these ads of course is to sell diet programs, gym memberships, and appeal to the psychology of self-image to make you act now! What if I told you there is a financial advantage to maintaining a healthy physique?
As a financial firm dealing with all sorts of planning we are always factoring the money side of the equation and doing the analysis for our clients. So what does that have to do with a healthy physique you ask? The answer is, a lot! On the more obvious side, maintaining a healthy physique and lifestyle will generally save you trips to the doctors office, costly prescriptions, and less need to buy new clothes (I know that’s not for everyone).
The real reason I wanted to write this article though was to show tangible figures that influence the majority of us whether you know it or not. This has to do with the insurance part of planning. Insurance has a cost and that cost is determined on the individual being covered. Group Life insurance is what most have through their employer and the rate is static across the participants because of the nature of the group, but have your companies ever asked you to do a wellness screening or offered incentives to participate in a wellness program? Those are all methods to get the rates from the insurance companies down to make the premium less to the employer and the employees. On the individual side life insurance is portable so your current job would not have an effect on your coverage if you left the employer. During the application process is when a typical health screening is done. Basic measurements are taken, medical questions asked, and samples provided to ultimately determine your rate for the foreseeable future of the policy.
Now, here is the fun part regarding the numbers. Insurance companies typically have 4 levels of rating classes and they usually look something like this (there would also be a Non-Tobacco vs Tobacco version)…
- Preferred Plus/Best
- Clean health history, no medications, ideal height and weight ratio, no family history (A small percentage qualifies for this rating class)
- Excellent health, few minor health issues usually controlled by medication, ideal height and weight, maybe your participate in a more dangerous occupation or risky sport
- Standard Plus
- Better than average health, minor health issues. Possibly slightly over the ideal height to weight ratio
- The most common category, average health, possibly on multiple medications, height and weigh guidelines not ideal
…So lets take a 50 year old non-tobacco male and a 50 year old non-tobacco female and compare the estimated premiums in today’s marketplace for the same amounts of insurance.
50 Male - Non-Tobacco - Arizona - 20 Years - $500,000
$850/year - Preferred Plus/Best
$1022/year - Preferred (20% Increase over Preferred Plus/Best)
$1386/year - Standard Plus (63% Increase over Preferred Plus/Best)
$1649/year - Standard (94% Increase over Preferred Plus/Best)
50 Female - Non-Tobacco - Arizona - 20 Years - $500,000
$645/year - Preferred Plus/Best
$790/year - Preferred (23% Increase over Preferred Plus/Best)
$1005/year - Standard Plus (56% Increase over Preferred Plus/Best)
$1259/year - Standard (95% Increase over Preferred Plus/Best)
So in reviewing the numbers you can see for the same amount of coverage the different rating classes are very different. Some of you may think, “well, it’s not that different,” but the reality is this is per year and a typical insurance policy is going to be held for a period of 20+ years when it is part of a financial plan. On the Male example the difference over 20 years is $15,980 and the Female difference could be up to $12,280 for exactly the same thing! Do you think you could put that money to better use?
So, if you need an incentive going into the summer and you like to keep more of your hard earned money then pay attention to your health!