When applying for cover, it is wise to disclose habits and pastimes such assmoking and taking part in hazardous sports, writes Laura Slattery
Smokers, people with a history of ill-health and people who regularly take part in hazardous sports, risk wasting their money on life assurance premiums if they do not disclose the information to the life assurer.
Around 4 per cent of applicants are told they must pay a higher than normal premium while 1 per cent of people will be refused life cover.
Financial advisers stress, however, that all material facts must be disclosed on the proposal form. Otherwise the person's next of kin may have his or her claim rejected.
"It is safer to mention it," says Mr John Geraghty, chief executive of LA Brokers. "You might have found a lump that turned out to be nothing, but that might not be trivial in the insurer's eyes. When they talk about not having to mention trivial ailments, they mean colds and flus," he says.
A life assurance policy that is not tied to a mortgage will pay a lump sum to the policyowner's next of kin that they can use to pay funeral expenses or invest to provide a regular income.
The amount of cover a person needs will vary according to the number of children and other dependants they have. As circumstances change, level term assurance for a set period is recommended, rather than expensive whole-of-life cover.
Although the need for cover depends on circumstances, there is "a very strong argument" for purchasing it when you are younger, Mr Geraghty adds.
The table above shows the most competitive premiums for men and women based on the age they first take out the policy.
Smokers will be quoted a loaded premium, as will people involved in hazardous sports such as racing, diving, mountaineering, potholing or aviation. Heavy smokers and heavy drinkers may find it difficult to get insurance, as will people who have had a heart attack, stroke or bypass surgery, people with a history of angina, cancer and other serious illnesses and people with insulin-dependent diabetes.
Applicants will also be asked to disclose any family history of kidney disease or cancer before the age of 60 and any history of circulatory diseases.
The life assurer may offer loaded rates, postpone cover or decline it outright.
Overweight people have an increased risk of developing certain conditions as time goes by and, in some cases, the life assurer may increase the premium after a certain period to reflect the risk.
If the risk decreases as time goes by, for example where treatment for a carcinoma is successful and risk of recurrence reduces over time, the company might impose a temporary loading on the premium and then revert it to the normal level.
Insurance companies differ on their view of risk, Mr Geraghty notes. The companies with the cheapest ordinary rates, might not be the cheapest for someone in one of the risk categories. For someone with a history of ill- health, the process of securing life assurance can take time.
"If you have an adverse medical history, the GP has 10 days to write out the report in accordance with IMO guidelines, so it can take two to three weeks," says Mr Geraghty. "For a more complicated case where the life assurance company has to write out for specialist reports, it can take two to three months."
The higher the value of the cover required, the more stringent the medical examinations, he adds.
