Long odds on survival

2nd February 1996 at 00:00
Actuaries say teachers are a high risk for sickness insurance, reports Paul Fisher

The hard-eyed statisticians whose job it is to calculate the odds on your getting sick all confirm that teaching is bad for the health. So bad, in fact, that many insurance companies have stopped selling sickness cover to teachers. They prefer to stick with safer bets who lead healthy lives in what are termed "sedentary, white-collar office jobs".

One of the companies still selling Personal Sickness Insurance (PSI) to education service staff has shifted teachers into the high risk Class 3 category along with tunnelling engineers. Those at the chalk face must therefore join those at the rock face in paying higher premiums and languishing sick for three months before their expensive income replacement comes through.

There's nothing personal in all this, merely a classification system which each insurer compiles on the basis of internal statistics and external reinsurance rates. What has emerged is a de facto industry standard prejudiced against teachers - and doctors, who have also been moved into the Class 3 group in recent years.

"Taking teachers as a group," says Peter Jeffs, from the Zurich Life claims department in Bournemouth, "the industry has found it is a poor risk from a stress point of view. There is a high burn-out factor."

Commercial Union pulled out of teachers' PSI last month, instructing its agents to point clients in the direction of Unum, an American company. PSI is not offered by the Teachers' Assurance Company, the insurers recommended by the National Union of Teachers. Municipal Life, which relied on local authorities for half its business, was taken over by Zurich Life in 1993 following a collapse, partially caused by sickness claims. Zurich Life still offers sicknessdisability insurance to teachers, though it is not promoted with vigour.

Where most charge high premiums or walk away, ExpaCare, a Woking-based broker, has started to advertise an income-replacement scheme which, coincidentally, is underwritten by Zurich Life (though from its headquarters in Switzerland). A 43-year-old teacher earning Pounds 45,000 would pay Pounds 740.43 a year for two years' replacement of 60 per cent of salary while a 25-year-old on Pounds 20,000 would pay Pounds 196.80.

Unlike other PSI schemes, the premium structure does not differentiate between men and women or smokers and non-smokers. The reason for the simplified approach is that ExpaCare's PSI is pitched at the complex market of expatriate teachers of all nationalities.

The broker has calculated that globe-trotting teachers are a self-selecting group of robust physique; that American-run schools in particular can be relied on to buy insurance in bulk; and that, while retaining Class 3 status, teachers considered as an international group, are a decent risk.

British teachers in British schools are not excluded, for coverage is only withheld in hot-spots such as Libya and Lebanon. The only British exclusion is that ExpaCare is not following its overseas practice of taking on schools or groups of schools. Local education authorities will therefore have to continue "self-insuring" (jargon for not insuring) against sickness.

PSI remains a dodgy game for actuaries because even though such policies have existed for 30 years, there are insufficient statistics to turn guesswork into solid prediction.

Death insurance, or life insurance as euphemism has it, has been around far longer and rates are therefore easier to calculate. None the less, they vary considerably and it pays to shop around.

Averages culled from 48 companies in the Stone and Cox Life Insurance Handbook show that a typical male non-smoker who is 30 next birthday must pay Pounds 209.88 a year for 25 years in return for his heirs getting Pounds 75,000 on his death. A non-smoking 29-year-old woman would pay Pounds 154.44 for the same lump sum. To qualify for the Pounds 75,000 payout, a 50-year-old male non-smoker would pay Pounds 716.28 and an 50-year-old non-smoker woman Pounds 483.

For the same Pounds 75,000 Zurich Life is close to the average for 30-year-olds and offers a better-than-average deal for older people, with 50-year-old men charged Pounds 518.64 a year and women Pounds 349.68. Commercial Union has competitive rates for the relatively young, with a 30-year-old woman paying Pounds 143.76 for Pounds 75,000- coverage.

ExpaCare's life coverage goes into the same age-banded rates as its disability insurance and likewise disregards smoking habits and gender. Unlike most life policies it is pegged to an occupation. Thirty-year-old teachers pay Pounds 150 a year for Pounds 75,000 coverage to retirement and 50-year-olds Pounds 429.75. Good rates, especially for male smokers.

Judging by ExpaCare's confidence, teaching abroad is good for health. But it is usually less secure in terms of overall long-term security. Frank Pursey, marketing co-ordinator of Teachers' Assurance, gives this reminder to his British customers: "Any teacher would be well-advised to take their superannuation scheme as a starting point when it comes to financial planning. This provides many basic benefits and our advice and service is intended to fill in the gaps."

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