A recent study suggests the rich live longer and thus are less of a risk to insurers than the poor prompting some to wonder if there should be different premiums based on financial status.
“This study found that Ontarians living in poorer postal codes were more likely to die young while people in wealthier postal codes were more likely to have a longer lifespan,” wrote LSM Insurance director of marketing Syed Raza earlier this week on LSM’s company website. “While the study didn’t actually explain why living in a richer postal code results in a longer lifespan, some of the obvious factors that can lead to this result include having access to better medical care, less crime and living in a cleaner environment.”
Should life insurance premiums be lower for the wealthy?
This rhetorical question asked by Raza is based on a 2013 Global News report analyzing income by postal codes in major Canadian cities across the country. In case you’re interested the number one postal code by income is H3Y – Montreal Westmount – at $220,578.
Raza goes on to debate the ethical questions surrounding such an obviously divisive subject suggesting that the industry already applies different rates to men and women as well as smokers and non-smokers.
So, why not the wealthy and not-so wealthy?
“Considering that a life insurance policy is already a big-ticket purchase and can often be tough to afford for many people, this could easily be considered as ethically wrong,” reasons the marketing executive. “It can also be argued that low income earners need life insurance more than wealthy people do. Low income families rely more on a life insurance policy payout if their breadwinner unexpectedly passes away. Wealthier families usually find it easier to absorb a loss of a breadwinner at a financial level.”
Have your say: Should the wealthy pay less for life insurance?