The three main areas that fall under the heading of 'lifestyle' from an underwriting perspective ar...
The three main areas that fall under the heading of 'lifestyle' from an underwriting perspective are alcohol, drug or solvent abuse and obesity.
Alcohol
The levels of alcohol seen on applications for life assurance can vary from total abstainers to alcoholism. However, regular drinking and heavy drinking on their own may not cause alcoholism. Alcoholism involves psychological and physical dependence, evidenced by large daily consumption, heavy weekend drinking or long episodic binges.
The short-term effects of alcohol can be a reduction in anxiety and inhibition. With increasing amounts, concentration and judgement can become impaired. However, heavier drinkers can develop liver diseases, including alcoholic hepatitis, cirrhosis and liver cancer.
Hepatitis is the inflammation of the liver, leading to degeneration or dysfunction of liver cells. It can be characterised by jaundice. Cirrhosis is the replacement of normal liver tissues by bands of fibrous tissues.
Heart disease and strokes are also possible side effects of long-term heavy alcohol intake. Inflammation of the stomach and peptic ulcers are common. Signs of increased alcohol consumption can be changes in drinking habits, a neglect of personal appearance and memory loss, while physical symptoms may include nausea, unsteadiness, shaking in the morning and redness and enlarged blood vessels in the face.
Individuals whose alcohol intake is criticised by their GP are likely to underestimate their intake and it can be difficult for the underwriter to ascertain the exact current alcohol consumption. It is possible that the underwriter will find a history of alcohol excess when investigating another disclosure on the application form. For example, depression can be associated with increased alcohol intake and clients may be prepared to disclose this rather than admit to excessive drinking.
Therefore, it is important that when the underwriter suspects that there may be a history of alcohol abuse that full information, including any relevant hospital reports, are obtained. Liver function tests can be useful in determining the extent of any liver damage arising from excessive alcohol intake.
An underwriter may also request an independent medical examination to see if there are any physical signs of alcohol abuse, which could include an enlarged liver.
When considering alcohol abuse the underwriter will not only look at the amount of alcohol consumed, they will also examine any damage or associated risks that may be evident. When considering terms for clients with a history of alcohol excess, the underwriter may offer the following terms:
l If there is no history of alcohol excess the underwriter will consider standard terms.
l If the amount of alcohol exceeds 42 units but there are no physical signs, the underwriter may consider a small loading of 50%-75%.
l In cases of moderate criticism of intake exceeding 70 units per week, and where there are physical signs, ratings can vary from 150%-300%.
l If there is severe criticism of intake the underwriter may consider not offering any terms.
l If there has been a history of alcoholism, the underwriter will not consider terms unless there has been total abstinence for at least 12 months. Following this period, a rating of around 200% can be applied, depending on how long the life assured has been abstinent.
When considering disability benefits the ratings tend to mirror those as for life cover. However, terms will not be available if the rating exceeds 150%. The majority of income replacement benefits will be declined if moderate criticism is suspected.
Drug and solvent abuse
Drug abuse can be defined as the use of any substance in a manner that deviates from the accepted medical, social or legal patterns that exist within a given society.
The use of a drug or combination of drugs to induce changes in mood, perception and, to a lesser extent, behaviour, may stem from various social, cultural and psychological influences. Social background and environment may be contributory factors or there may be a desire to conform within a certain social group. However, there may be an underlying personality disorder attributed to the drug abuse.
Abuse of some drugs may be intermittent, resulting in minimal damage, however, in other cases, the user may become dependent on the drug. The symptoms of withdrawal vary according to the drug concerned, but they can be so unpleasant that the user will often go to great lengths to avoid them.
Mortality and morbidity among drug addicts are high, many committing suicide. Others may die following a massive overdose. Other common causes of death or disability are acute infection, active chronic hepatitis and hepatic cirrhosis, all of which are mainly due to the use of unsterilised needles.
The most common drugs an underwriter will come across are:
l Amphetamines: Tolerance to these drugs is often marked, especially when taken intravenously and in large doses. Effects can include anorexia, insomnia and a sense exhilaration. Due to the apparent ease with which dependence can occur, prescription of amphetamines for fatigue or obesity has been restricted in many countries.
l Barbiturates: The general effect of these drugs is depression, reduced alertness and slurring of speech. Dependence is mainly psychic but if taken in large doses a physical dependence may occur. These drugs are now only prescribed to control epilepsy.
l Cannabis: This drug can produce a general feeling of well-being, elation and enhanced perception of colour, sound and taste. There can be a degree of social and psychical dependence but rarely any physical dependency. It can be common practice in some cultures and it has been argued that it can be equated with alcohol. There can be an associated risk in the increase of smoking-related diseases, but there is also a risk that the user may be tempted to try 'harder' drugs.
l Opiates, including opium, derivatives of opium (heroin, morphine), codeine, methadone and pethidine: They can induce tolerance and rapid dependence. Some people who have a tolerance may show few signs of drug use.
l Cocaine: Crack is commonly used as a snuff. Mixing the drug with opiates is also common. Psychic and physical dependency is strong. Crack is a nearly pure form of cocaine and addiction is quick and powerful.
l Hallucinogens, including LSD (lysergic acid diethylamide): These drugs can be prescribed in psychiatric practice, but illegal use can lead to distortions in perspective, colour, movement and sound. Psychic dependence is strong. If used for long periods of time mental disturbance such as schizophrenia may result. Hallucinations can lead to attempted suicide or homicide.
l Abuse of solvents: Glue-sniffing is one of the most common forms of solvent abuse. Psychological dependence is strong, although it appears there is very little, if any, physical dependence. Physical side-effects are common but can be reversible if the abuse of the solvent stops. Continued exposure is likely to lead to permanent damage and the side-effects can range from vomiting to kidney, brain and liver damage.
On disclosure of a history of drug abuse the underwriter will always obtain the relevant information from the life assured's own GP, including any relevant hospital reports. An independent medical examination and a drug screen may also be requested if continued drug abuse is suspected.
Life benefit ratings for drug and solvent abuse can vary depending upon the drug used. It is possible for terms to be given if the life assured has only been using cannabis occasionally, however a loading of around 50%-100% may be applied if there has been heavier use. It is unlikely an underwriter would consider offering terms if the proposer is currently using any of the other drugs listed above.
If the life assured has ceased taking drugs the underwriter may consider terms. However, there can be a delay period of up to three years from total abstinence before terms can be offered. Once terms are offered, the rating is likely to be applied on a temporary basis for the first five or six years of the policy. It is highly unlikely that terms would be considered for disability benefits until the life assured has been abstinent for at least five years.
Obesity
Obesity exists when the intake of food and/or drink exceeds the energy used in physical activity and the internal work of the body. It is normally characterised by excessive distribution of tissue.
The basic cause of obesity is the consumption of food in excess of requirements, although several other factors may contribute to its development. There may be a genetic predisposition to obesity, psychological factors, injury or disease. Although not compatible with good health, obesity predisposes to, or aggravates, many impairments (see box on page 54).
The main treatment for obesity is obviously following a well-balanced diet, along with regular exercise. However, the medical treatment of excessive obesity is generally unsatisfactory and has led to the introduction of various surgical procedures.
Insurance ratings will depend upon the individual's height and weight ratio at the time of application. Up to a certain level, the underwriter may be prepared to accept the height and weight disclosed on the application. As people tend to underestimate their weight and overestimate their height, it may be necessary to request an independent medical examination to obtain an up-to-date height and weight reading.
Ratings for life benefit can vary from 50% extra mortality up to 300% extra mortality. It is unlikely than an underwriter would consider a disability benefit where the equivalent life rating exceeds 100% extra mortality.
Martin Williams is an underwriter at Guardian Financial Services
