New year health kick can pile pounds on your wallet

Huffing and puffing over health resolutions has its benefits. Picture: PA

Scots embarking on a New Year health kick could save pounds in more way than one if they succeed in losing weight and stopping smoking.

More than half of us plan to get fit in 2014, while a similar amount pledges to lose weight over the coming months and a fifth will attempt to quit smoking, according to a Gocompare poll of new year resolutions.

And those sticking to their good intentions could make some valuable extra savings.

The average smoker spends around £150 a month on tobacco, according to the NHS smokefree website, amounting to almost £2,000 a year in potential savings from giving up. Visit www.nhs.uk/smokefree/why-quit/cost-calculator to work out how much you could save by quitting.

However, there are also significant insurance savings on offer, making it well worth rebroking to a cheaper premium once you notch up 12 months as a non-smoker, although that includes going without nicotine replacement products, too.

Life insurance premiums are around 50 per cent higher for smokers than for non-smokers, according to broker LifeSearch.

Someone who quits smoking at 30 can save £43 a year and more than £1,000 over the term of a 25-year £100,000 level life insurance policy, it found.

The same smoker quitting at 40 can slash their monthly premiums from £21.70 to £11.33, based on current quotes for smoker and non-smoker monthly premiums. That is a reduction of £124 a year and £3,100 over the term.

The savings are even greater for those quitting at 50 – £381 a year and £9,525 over the 25 years, the LifeSearch quotes show.

The cost of other insurance policies, such as income protection and critical illness, can also be slashed for those who manage to remain ex-smokers.

Tom Baigrie, chief executive of LifeSearch, said: “If you stop smoking, lose weight or reduce the amount of alcohol you drink then it can have a huge impact on your life or critical illness premiums.

“If your lifestyle has improved it is a good idea to revisit your cover as you may be surprised at how much you can save every month.”

New Year health pledges can help drive your insurance premiums down in other ways, too. Some insurers now offer policies that reward customers who can demonstrate healthy lifestyles with benefits including lower premiums, cashback and gym deals.

The best known is the Vitality scheme from PruHealth. Policyholders can collect points against certain criteria measuring their health, such as fitness events, regular exercise and eating well. Cashback of up to 20 per cent of the premiums is available after three years. Over 25 years those earning the most points and qualifying for platinum status can cut their life and critical illness premiums by up to half, the insurer claims.

Points can also entitle members to discounts with partners including gyms, spas, health centres, travel companies and supermarkets.

But it is not just incentive-based policies that offer savings if you are on a health kick, pointed out Paul Lothian, director at Verus Financial Planning in Dundee.

“Not being overweight, being a non- smoker and not exceeding the recommended intake of alcohol all mean that premiums for life and health insurance covers are more likely to be offered at standard rates rather than with loadings,” he said.

Most insurers now use a customer’s body mass index (BMI) reading when working out their premiums, due to a statistical correlation between a high BMI and lower life expectancy.

Some add loadings when the BMI reaches 29, although the more common figure at which premiums rise is 40.

However, it is worth shopping around even if you are not one for new year resolutions, as the cost of life cover can vary significantly between insurers. A 40-year old buying £100,000 of life cover over 25 years can save £1,000 over the term of the policy by opting for the cheapest provider rather than the most expensive, LifeSearch research shows.

Baigrie said: “Different insurers will suit people’s specific circumstances, depending on factors such as your health, lifestyle or occupation, and no one insurer is the best value for everyone.”

Festive debt fear pushes helpline traffic up by 30%

THE number of people who contacted StepChange Debt Charity for help with money problems soared by 30 per cent in Christmas week.

It told The Scotsman that 2,613 people contacted its advisers for free debt help between 24 and 31 December, an increase of almost 600 on the same period in 2012.

The increase is likely to indicate yet another rise in the number of people turning to high-cost credit to fund their festive spending. More than a million people said they had planned to use payday loans to cover their Christmas expenses, the Money Advice Service warned, while 16 million said they would use credit cards.

StepChange Debt Charity Scotland is braced for a sharp rise in demand for its services this month.

In January 2013, the number of people calling for advice was more than double the previous month, with one in four of those callers struggling with payday loan debts.

Sharon Bell, head of StepChange Debt Charity Scotland, said: “Whilst on one level concerning, its also encouraging that more people are taking control of their financial problems, even during the Christmas break.

“The new year is the perfect opportunity for everyone to feel confident that with free help and advice, solutions are there to deal with their debts.”