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What is BMI and why does it impact what I pay for life insurance?

This story on insurers casting aside doubts on BMI tests appeared in the NZ Heraldthis weekend. Questions are being asked about the use of BMI in setting life insurance premiums, saying such an indicator is inaccurate.

BMI stands for body mass index and is calculated by taking the persons mass in kilograms and dividing it by the square of the person’s height in metres.

Generally a ‘healthy’ range is around 18.5 to 32. Below or above this range is usually regarded as moving into the ‘unhealthy’ zone. The more unhealthy a person is perceived to be, the higher the risk of an earlier-than-average death and the higher that person's insurance premiums will be. We'll put our hands up and say that BMI alone is not a definitive test of health. That’s why insurers look at BMI together with other factors such as smoking, alcohol consumption, drug use, blood pressure problems and cholesterol problems to get a better overall indication. One of the best ways to measure health is the amount of regular exercise that a person does and how fit they are. Problem is that this would require a physical test for all life insurance applicants and this is not always practical. So, unless we find a better way, insurers will continue to use BMI as one of their many indicators of risk.

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