Why does less than half the UK population have life insurance cover? Page 2

Even four years ago it was quite obvious who would have trouble

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getting insurance at standard rates - former cancer suffers, someone with a history of heart or circulatory problems and diabetics for example. The situation has now changed. The insurers' application forms are now far more detailed and ailments that were previously acceptable under standard terms are now only accepted with loaded premiums. Take your weight - insurers are clamping down where they consider a person's weight to be a threat to their longer-term health. In it's not only the obviously obese that attract the insurer's attention. ( best mortgages ) The insurers are using a calculation called the Body Mass Index. This is calculated by dividing a persons weight by the square of their height. Insurers now want a BMI of 29 or less, whereas previously up to 40 was OK. This means that a woman weighing 83 kilos and 1.66 meter tall would now face higher premiums.

The application process too can put people off. Whilst around 30% of applicants will get a decision almost immediately, for everyone else the process can become one delay after another. As if a 14-page application form were not enough, some people are faced with additional forms to complete and medical examinations. Sometimes the whole process can stretch to 8 (travel insurance ) weeks, even more, before the applicant knows exactly how much the premium will be. If that works out more that the person can afford, the applicant is often too fed up of the whole process to start again with another insurance company. This leaves yet another family uninsured.

Despite these criticisms, the insurers claim that life insurance premiums are generally lower today that a few years ago, thanks to more sophisticated underwriting procedures ( cheap car insurance ) and computerised risk assessment. Furthermore around 10% of life insurance is bought on the Internet where competition has forced discounting resulting in much lower premiums.

Nevertheless, in our view it will take many years to get the percentage of people covered by life insurance above the 50% mark.