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Sweating it out to stay fit and feeling great? Then get ready to savour some great discounts from life insurers

Being in the pink of health has never commanded such a huge premium. That is, in terms of discounted life insurance premium. It literally pays to be healthy today. Both life and health insurance companies are encouraging policyholders to tread the mill to stay healthy. They are rewarding the willing ones with reduced premiums or certain loyalty benefit programmes. While healthy practices are yet to earn discounted premiums on health covers, life insurance companies have been doling out term covers at cheaper rates to certain categories of individuals.

Typically, non-smokers and women are charged lower premiums in case of most life insurance policies. However, the definition of a healthy lifestyle is not confined to abstaining from tobacco consumption alone. A host of other factors play a role in determining the premium. From the life insurance company's point of view, the health of the person who is to be insured plays a critical role in underwriting the life. If the person is obese or has hypertension and/or diabetes, his/her premium will be higher, as the risk for the company is higher as compared to a healthier insurance-seeker. For instance, a 40-year-old insurance-seeker suffering from diabetes may have to shell out even double the amount of premium that would be applicable to a healthy individual.

"In general, adverse medical conditions are rated according to the severity and combinations of the conditions. So, a diabetic whose sugar levels are controlled would perhaps pay around 50% higher premiums," adds Andrew Cartwright, chief actuary, Kotak Life Insurance. "However, if diabetes is not under control and is associated with other adverse factors (like obesity, smoking, hypertension, family history etc), the case may be rated much higher or may even be declined depending on the various adversities and combinations impact of the risk markers."

Star Treatment:

Things get even better if you fall in the sought-after category of high net worth individuals (HNIs). While most life insurance policies offer discounts to non-smokers and women, some insurers like ICICI Prudential Life, Birla Sun Life, SBI Life and Kotak Life offer a special category of term policies, primarily aimed at affluent individuals. They are presumed to have lower mortality rates, thanks to their lifestyle, which is assumed to be less prone to risks. They take good care of their health and also have access to quality healthcare which, by and large, ensures that they are hale and hearty most of the time.

The minimum sum assured for such policies is usually 25 lakh and some companies offer an additional discount for those opting for a cover higher than 1 crore. "Our preferred term plan provides a big discount to non-tobacco users. By selecting the better (lower) risks in this way, we are able to offer better rates to a large proportion of clients who do not smoke/chew tobacco or use tobacco toothpaste. In other words, those who do not consume tobacco in any form," explains Mr Cartwright.

Even within this product category, there could be further classification in terms of smokers, nonsmokers and preferred non-smokers. Typically, a preferred non-smoker is the one who, in addition to abstaining from tobacco, does not suffer from any ailments at the time of buying the policy. Says V Viswanand, director and head, products & persistency, Max New York Life Insurance: "We have introduced three underwriting classes based on lifestyle to provide better rates to those maintaining a healthy lifestyle. An individual can avail up to 36% reduction in premium rates, depending upon his lifestyle." What's more, when it comes to carrying out medical tests like electrocardiography (ECG), some companies also offer home visits to avoid causing inconvenience to the proposers of high-value policies.

Stringent Tests:

Such policies are primarily targeted at the well-heeled individuals, but they may not automatically make you eligible for the cover at throw-away prices. The underwriting process that the proposer has to go through for such policies is expectedly stringent. Explains Mr Viswanand: "Since this is a pure protection plan with a high sum assured and a low premium, all the customers are subjected to compulsory medical scrutiny which involves several tests." The tests, which vary as per the insuranceseeker's age and the life cover chosen, could include blood profile, ECG, microscopic urinalysis (MSU) and urine cotinine test (for non-smokers). "Some tests are expensive, and can only be costjustified when the sum assured is high, the consequences of the condition are severe, and the likelihood of the condition is sufficiently high (often age related)," informs Mr Cartwright.

Is it Worthwhile?:

Term plans, without doubt, qualify as the best option when compared to other types of policies like unit-linked insurance plans (ULIPs), money-back policies, endowment schemes etc available today. While term, or pure protection, policies do not promise to return any amount after the completion of the tenure, they fulfil the basic purpose of obtaining life insurance policies - replacing the insured's income to ensure that the dependents are financially secure even in the absence of the breadwinner.

Any additional discount in premium for staying fit is, therefore, a bonus. "These special term plans generally work out to be cheaper than the regular ones. If an assessment of your needs and income reveals a requirement for a sum assured of 25-lakh cover or more, you can certainly consider opting for such special plans," advises certified financial planner Prerana Salaskar-Apte, a partner with financial planning firm The Tipping Point. As a thumb rule, you should look to a buy a life cover equal to 100 times your monthly income. This apart, you can also consider supplementing the pure life insurance with disability and personal accident covers. The former is particularly critical if the insured is faces loss of employment due to permanent or temporary disability. The policy offers monetary compensation as per preagreed terms in case of such unfortunate occurrences.

HEALTH IS WEALTH

Life insurance policies have started offering discounts to people leading a healthy lifestyle

Some are now offering even cheaper cover for high net worth individuals with better health parameters

These are pure term policies, but are only offered to a certain class of people and they have much lower premium.

Obtaining a cheaper cover is not easy as one has to undergo a host of medical check ups

Non-smoking policyholders can expect a discount of up to 36% in premium

The minimum sum assured for life cover for such policies is usually 25 lakh. However, some companies prescribe an entry threshold of 50 lakh

Some insurers also offer additional discounts to policyholders opting for cover of more than 1 crore

Source: epaper.timesofindia.com