It is well known that us Brits like a tipple and with UK alcohol consumption set to increase by 40% over the festive period(2) how much is too much?
It is widely cited that The Royal College of Physicians (RCP) recommends no more than 21 units of alcohol per week for men and 14 units for women, but at what level of alcohol consumption do protection insurers start getting concerned?
Insurers clearly have the incentive to identify adverse risks. For example, smokers often pay 75% more for their life insurance. This reflects the fact that smokers are far more likely to become ill and pass away during the policy term, which means the insurer is far more likely to have to pay out.
Insurers’ threshold 70% higher than RCP recommended limit
On average, protection insurers do not start asking for further information until around 36 units per week (18 pints of beer) is disclosed on the application, which is just over 70% higher than the recommended limit suggested by The Royal College of Physicians (RCP).
It should be noted, however, that if there is any indication of ongoing alcohol dependency all insurers will immediately decline an application. If there has been a period of alcohol dependency in the past many insurers will require an alcohol free period of at least 5 years before they will consider offering cover.
Automatic premium loading 124% higher than RCP limit
After requesting further information, most likely in the form of a GP Report, if there are no associated health risks, insurers start implementing automatic premium loadings (of between 50 to 100%) at around 47 units per week (23 pints). This threshold is about 124% higher than the RCP recommended limit.
Although insurers do have maximum limits where an application would be automatically declined (of 53 units for income protection insurance and 82 units for life insurance), it is likely that anyone consuming that level of alcohol would be displaying associated health risks, such as an abnormal liver function test. This means an application is likely to be declined before that automatic decline limit.
Insurers have different limits
The data above is based on an average of four leading insurers. Even between this group there are significant differences, for example, Liverpool Victoria (LV) would write to the GP for more information at 30 units per week, whereas this automatic threshold is set at 43 units with Legal and General (L&G).
Thus, provided there are no associated health risks or evidence of alcohol dependency, leading UK protection insurers do not start becoming concerned with alcohol consumption until at least 30 units per week (15 pints) is being consumed on a regular basis (the limits for women are roughly a third lower than for men).