How to use fear as motivation to improve my health>diet, exercise mainly?

Don't recommend it. Fear is a pretty good motivator for short-term results. But if you want to change your lifestyle permanently you'll have to find some positive reasons for doing so. Why do you want to improve your health? Think about why your health is important to you and what you'd be willing to do -- over the long run -- to make it better. There are no quick fixes.
Talk openly. Talk openly about failure. Make failure a safe topic to discuss by using yourself as an example. Let your participants know about the time you attended another teacher’s class and went left when everyone else went right. Or tell them how you took a new class at a recent convention and felt like a novice exerciser. Also encourage your participants to share their own fears. Ask them what they think.