Insurance companies classify customers on various parameters to evaluate risk in their undertaking. A banker’s job, for instance, is considered to be a less hazardous job than that of a construction engineer and premiums are charged accordingly. Similarly, smoking habits affect longevity and therefore one’s premium.
Here is a smoker’s guide to getting the best from their insurance buying:
Who is a smoker?
If you use cigarettes, hookah and cigar or chew tobacco, you are classified as a smoker. While e-cigarettes, vaping and gum are touted as healthier alternatives to smoking cigarettes, insurers still label you as a smoker.
Moreover, insurers have their own methodology. For instance, one private insurer classifies you as a non-smoker only if you have not smoked or used tobacco in any form in the last three years. For another it is a relatively lesser window period of one year. So, check the fine print.
How to get an insurance policy?
You need to fill up an application form by giving all the required details. Honesty is the best policy – so be open about your smoking habits and medical history.
Some insurers might ask you to go through a medical test. Traces of nicotine are usually found in hair, blood, urine and saliva of a smoker. Alternatively, some insurers resort to telephonic and video medical consultation to complete the verification process.
It is advisable to go through a medical test as it reduces chances of disputes in case of claims.
Are the premiums higher?
Yes. Premiums for smokers are usually higher for smokers and are also a function of one’s age and the policy tenure. For instance, a 30-yr non-smoking male seeking an Rs 1 crore life cover till 60 years have to pay an annual premium of Rs 10,648 while it is 51% higher for a smoker.
However, some health insurers don’t charge an extra premium for smokers, if you declare that you don’t have a lung disease.
Do all smokers pay the same premium?
Usually, insurers classify smokers based on their frequency of smoking and health condition.
• Preferred Smoker - Someone who apart from smoking is overall fit. The premium for this type of smoker is the least.
• Typical smoker - Those with a minor lingering health issue. Premiums are slightly higher as compared to a preferred smoker.
• Table-rated smoker - Those having an obvious health condition owing to smoking. The premium for them is generally the highest among all the three types.
Some others might have a pre-defined limit whereby they charge you higher fees only if you cross a threshold – say smoking 20 cigarettes a day.
Why do insurers charge high premiums to smokers?
The lifespan of smokers, on an average, are lesser as compared to that of non-smokers. Moreover, they are prone to illnesses relating to lung, heart and bronchitis. To cover the risk, they charge you a higher premium.
What if I hide the smoking habit from the insurer?
It could potentially lead to disputes at the time of claim and thereby affect the financial security of your family. Insurer can reject the claim due to non-disclosure of material information from your end. Moreover, they can sue you on charges of fraud.
Will my claims be rejected due to smoking?
This is a common misconception smokers have, especially in regard to taking health insurance. They believe that an insurer will consider all future ailments to be a result of their smoking and reject claims. However, such apprehensions are unfounded. Smoking-related health risks have already been factored into their pricing (in the form of higher premiums) by the insurer.
What if I quit smoking after buying the policy?
It is good news as it could lower your premiums. Some insurers, in fact, financially reward smokers to encourage them to quit smoking. As part of their wellness benefits, they redeem their out-patient expenses such as diagnostics and consultation fees.
Usually there is a window period of 12-18 months before the insurer starts factoring this healthy habit in their premium calculations. And one might be asked to go through a medical test once again. Alternatively, you can also scout for another insurer and start afresh.
What if I start smoking or increase its frequency after buying the policy?
It is advisable to update your insurer as regards these lifestyle changes adopted.