I’ve been conscious about my weight recently. It’s not because of a New Years resolution or that I’m particularly overweight, but I’ve been thinking about how weight is related to money.
Americans spend $40 billion a year on dieting programs and products.
When my employer offered supplemental life insurance through payroll deduction, I took up a policy without any thought. It was cheap and there was no medical evaluation, so it was very simple to sign up for. As I started reading more personal finance books, I noticed that every finance expert advises readers to purchase term life insurance. Not supplemental life insurance (group term life insurance) through an employer, but an individual term life insurance policy. Why would it matter?
When I examined the supplemental life insurance policy through work, I realized that the premium (or cost) is age-banded. This means that as you age, the cost of the policy will rise. Right now, my premiums are cheaper than what I can get on my own, but my premiums will rise every five years.
Group Term Life Insurance Age-Banded Premium Increase
- Age 34 and under = Base Rate
- Age 35 – 39 Years = 33.33% Premium Increase
- Age 40 – 44 Years = 50% Premium Increase
- Age 45 – 49 Years = 66.66% Premium Increase
- Age 50 – 54 Years = 50% Premium Increase
- Age 55 – 59 Years = 60% Premium Increase
- Age 60 – 64 Years = 25% Premium Increase
- Age 65 – 69 Years = 83.33% Premium Increase
- Age 70 – 74 Years = 67.27% Premium Increase
- Age 75 and up = 95.65% Premium Increase
If you picked up group term life insurance at age 30, and lived until 75 years old (assuming you take the group term life insurance policy with you when you retire), you will experience a 5,900% increase in premiums over your lifetime!
So what does this have to do with weight? In order to get the best possible rate for term life insurance when purchasing it on your own, you need to fall under the “preferred” category. The preferred category is someone who is low risk, basically healthy, and a non-smoker. Healthy includes being within your BMI (Body Mass Index) range. The reason I’ve been weight conscious and working to lose 5-10 pounds is so I can fit in my “ideal” weight range and capture the lowest possible premium for term life insurance. Losing the weight will save me thousands over the life of the policy and will keep me healthy.
Over time, the premium increases from a workplace offered supplemental life policy will outpace the premium from a term life insurance policy. Buying term life insurance on your own will afford you with a premium that will remain the same over the life of your policy. Most insurance companies will not reduce your premium if you lose weight later. Once the premium is set, that’s what you pay. I’ll end up saving more in the long run by getting my own term life insurance policy. If I got a new job, I will not be at risk of paying a higher premium if that employer is not able to negotiate as good of a deal as my current employer. The policy follows me wherever I go.
Insurance is one of the best examples of how losing weight can help save money. Health insurance companies are now experimenting with incentives to get their members to stay active. You can earn cash or gift cards for participating at the gym, taking a health survey, or getting routine health screenings done. It’s a great way to get the preventative care done that you might skip without the incentives.
The Top 5 Reasons To Lose Weight
- Be healthier and live longer.
- Pay lower insurance premiums (for life and health insurance).
- Spend less on diet related programs and products.
- Save money on future healthcare costs. The risk of stroke, heart disease, and diabetes as a result of living at an unhealthy weight can dramatically increase your costs related to long-term care.
- Losing weight can be a fun challenge. Use it as an excuse to enjoy to the great outdoors. The money you save on the cost of unhealthful foods can be saved and used to purchase new clothes when you reach your target weight. You should reward yourself for reaching your goal.
Can you think of any other ways losing weight can save you money? I’d love to hear your weight loss story, especially if you’ve managed to save money in the process.