What is the Effect of BMI on Term Insurance Plan Premium?

1. Introduction

Are you considering purchasing a term insurance plan to secure your family’s financial future? It’s crucial to understand that your health plays a significant role in determining the premium amount you will pay. One important factor that influences the premium is your Body Mass Index or BMI. In this article, we will delve into the effect of BMI on term insurance plan premiums and why it matters.

2. The Basics of BMI

BMI, or Body Mass Index, is a measurement calculated by dividing a person’s weight by their height. It offers an indication of whether an individual is underweight, normal weight, overweight, or obese based on their height and weight. While it doesn’t diagnose any underlying health issues, BMI serves as a vital indicator of overall health.

To calculate your BMI, use the following formula:

BMI = Weight (kg) / Height (m^2)

Insurance companies utilise this calculation along with other medical examinations to determine the premium for your term insurance plan. For individuals between the ages of 18 and 65, a healthy BMI falls within the range of 18.5 to 24.9.

3. The Impact of BMI on Insurance Premiums

In simple terms, the relationship between your BMI and term insurance premiums which are calculated through term insurance calculator is inversely proportional. If you fall within the normal weight category, insurers will offer you more favourable premium plans. Conversely, individuals with higher BMIs may have to pay higher premiums even if they are on the lower end of the overweight scale. Obese individuals generally face the highest premiums.

Insurance companies increase premium rates at a fixed percentage for individuals with higher BMIs because they are more prone to chronic diseases such as diabetes, high cholesterol, and heart-related illnesses. These conditions increase their risk of shorter life expectancy. Similarly, underweight individuals also face an increased risk of critical illness.

Let’s have a look at some examples to understand the impact of BMI on term insurance premiums:

1. Example 1: Rahul is a 30-year-old individual with a normal weight and a healthy BMI. He takes out a term insurance plan with a sum assured of ₹1 crore for a policy term of 30 years. Since he falls within the normal weight category, his insurer offers him a favourable premium rate of ₹10,000 per year.
2. Example 2: Neha is also 30 years old, but she falls into the overweight category with a higher BMI. When she applies for the same term insurance plan as Rahul, her insurer charges her a higher premium of ₹15,000 per year due to the increased risk associated with being overweight.

As you can see from these examples, individuals with higher BMIs may have to pay significantly higher premiums for term insurance plans.

4. Categorising BMI Scores

Based on BMI scores, individuals are categorised into four groups: underweight, normal weight, overweight, and obese. The following table outlines the ranges for each category:

5. Should You Buy Term Insurance for a High BMI?

Regardless of your BMI, a term insurance plan is a beneficial financial tool that protects your loved ones in unfortunate circumstances. However, it becomes even more essential to purchase one if you have a high BMI.

Individuals with higher BMIs are at an increased risk of developing medical conditions such as diabetes, high cholesterol, hypertension, and sleep apnea. These conditions raise the risk of mortality compared to individuals with normal BMIs. Therefore, if you fall within the overweight or obese categories based on your BMI calculation, it would be wise to purchase a term insurance plan immediately.

By understanding the impact of BMI on insurance premiums, you can not only protect your family’s financial future but also motivate yourself to take care of your health and lifestyle. A higher premium can serve as a reminder to prioritise your well-being and adopt healthy habits.

It’s important to note that BMI is just one of the many factors insurers consider when calculating premiums for term insurance plans. They also take into account age, occupational hazards, family history of medical conditions, tobacco use, alcohol consumption, and other lifestyle factors. It is also important to learn more about the term insurance tax benefits under Section 80D.

6. Conclusion

BMI plays a significant role in determining the premium amount for term insurance plans. Individuals with higher BMIs may have to pay higher premiums compared to those within the normal weight range. However, this should not discourage anyone from purchasing term insurance coverage. Regardless of your BMI, it is essential to secure life insurance and protect your loved ones financially.

Remember, term insurance provides a safety net for your family in case of any unfortunate events. So, calculate your BMI, understand where you fall in the range, and choose an appropriate term insurance plan that suits your needs. Taking care of your health and adopting a healthier lifestyle can not only reduce the risk of chronic diseases but also lead to financial savings in the form of lower-term insurance premiums.

Remember, your health and financial well-being go hand in hand. Make informed decisions, secure the right term insurance coverage, and enjoy peace of mind knowing that your loved ones are protected.