Fatties Not Fit For Life Insurance

A worrying fact is that a quarter of children are classed as overweight before they are old enough to start school.That figure is one in three by the time they enter secondary school at the age of 11.

Obesity can be related to a range of health problems including diabetes, heart and liver disease and even cancer.In less than a decade since 1999 the number of doctors' prescriptions for obesity drugs rose from 127,000 to more than a million.And now the insurance companies are going to make the fatties pay.

The Body Mass Index (BMI) is the tool used to calculate whether a person is of 'normal' proportions, or 'overweight', or 'obese', which is anyone with a BMI of over 30.This is the figure at which many insurance companies start charging up to 50 per cent higher premiums.In the past a BMI nearer 40 was used, but as it became clear how serious Britain's obesity problem was, the figure was lowered to 30.However, they might decide to drop lower still, heading closer to the 25 mark where the 'overweight' category starts.

If you are obese and also have other high-risk factors such as being a smoker or suffering from certain medical conditions, the increase in the cost of your premiums could soar to a staggering 400 per cent!

An example for 150,000 pounds of life cover for a 55-year old man in good health, who is a non-smoker of normal weight, is about 1,000 pounds a year.Let him become obese and his 25-year policy could cost him 500 pounds more.

Not all insurance companies use the same BMI rate.The second largest insurer, Norwich Union, uses 35 as the figure at which to raise the premium costs, and the third largest, Friends Provident, goes from 33.

Legal and General, Britain's leading insurer, uses a BMI of 30, and said that 13 per cent of new customers would have to pay the higher premiums.

L and G's director of underwriting and claims, Russ Whitworth said, "Most people understand that poor diet and lack of exercise can lead to health problems but they might not realise that being significantly overweight would also make their life insurance more expensive."

"Although it is not an exact science, we find that BMI is the best indicator of the risk of being overweight, so it pays to stay in shape.

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The Association of British Insurers backs its members' decision to charge higher premiums for the obese, claiming that it is no different from charging more for a smoker or somebody with a previous medical condition.

Problems could arise for super-fit sportsmen who would have to convince their insurers that their high BMI score is due to building up solid muscle rather than being obese.It's no point being economical with the truth when an application form asks for your height and weight.In the event of a claim, the company won't pay out if it catches you out in a lie.The Financial Ombudsman Service says it constantly throws out cases where a claim has been rejected for this reason.

Recently a man of 37 claimed on his application to be six foot tall and to weigh 16 stone.When he died of a blood clot five months later it turned out he was only 5 foot nine inches tall and five stone heavier.Needless to say there was no pay out.His premiums would have increased by 275 per cent if his true details had been known, but his claim would have been valid.

The Financial Ombudsman ruled that there was such a difference between what he put on the form and what he actually measured that it couldn't have been a mistake.

Matt Morris, a policy adviser at specialist financial advisers Life Search, explained, "In an ideal world, insurers want the healthier clients.There is an element of cherry picking.They don't want the burden of the heavier client."

The Prudential is doing something to help.

It now offers free gym membership, and if you use it at least twice a week you get a 2.25 per cent discount as well.

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What Is Adjustable Rate Mortgage ARM

An Adjustable Rate Mortgage ARM is one of the most popular options available for both home mortgages and re-financing. Many homeowners do not fully understand the concept of an ARM and as a result may be somewhat hesitant to pursue this type of a mortgage.

This is a shame because there are some situations in which an ARM or a hybrid mortgage can be the best mortgage solution for a homeowner who is in the process of re-financing.

This article will focus on explaining the concept of an ARM, explaining situations where it is the best solution, debunking the most popular misconception regarding ARMs and explaining how those with bad credit can benefit from an ARM. At the conclusion of this article the reader should have a better understanding of ARMs and should be inspired to investigate this re-financing option further.

What is an ARM
An ARM is an acronym for an adjustable rate mortgage. This means the interest rate associated with the mortgage is not fixed. Instead it is tied to an index such as the prime index and may rise and drop as the associated index rises and drops.

The fact that interest rate is variable scares away many homeowners from considering this option further. However, there are certain safety measures in place which protect the homeowner from rapid increases.

This safety measure will be discussed in greater detail later in the article on the section on the biggest myth regarding an ARM. However, for now homeowners should simply be aware that they would not be subjected to incredibly high interest jumps during a short period of time.

The Biggest ARM Myth
The variability of the interest rate in an ARM makes many homeowners feel very apprehensive. These homeowners envision interest rates going through the room during their loan term and resulting in their monthly payments skyrocketing. However, fortunately for these homeowners, rapidly increasing interest rates may not have a significant effect on ARMs.

This is because most ARMs have a built in clause which prevents the interest rate from rising more than a certain amount during a specific time period. During this time the national interest rate may rise significantly more but there is a cap on the amount the homeowners interest rate will be raised.

When is an ARM Desirable
One of the most desirable situations for an ARM is as a part of a hybrid mortgage. Hybrid mortgages typically have one component which is fixed and one component which is adjustable.

These types of mortgages may have a fixed rate for a set number of years begin to vary after this initial period. Alternately a hybrid loan may be variable for a number of years and then become fixed after this initial period.

The loan which begins with a fixed rate is usually desirable because the introductory rate is typically lower than the rate offered on traditional fixed loans for homeowners with comparable credit ratings. Homeowners may particularly like this option if they are repaying a smaller second mortgage and may be able to repay the loan in full before the introductory period ends.

ARMs for Those with Bad Credit
ARMs can also be very helpful for assisting those with bad credit in purchasing a home for the first time. There are a variety of loan options available today which makes it possible for even homeowners with poor credit to obtain a home loan.

However, those with bad credit are usually offered these loans with unfavorable terms such as higher interest rates. Additionally, lenders may only be able to offer those with poor credit an ARM.

Lenders take a significantly greater risk when they lend money to a homeowner with bad credit. As a result the lenders usually compensate for this increased risk by shackling the homeowner with less favorable such as a mortgage with an adjustable rate as opposed to a fixed rate.


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