In a recent survey, ICICI Lombard Smoking Habits 2013, the general insurer says five per cent of total cancer claims in the last two years were related to tobacco consumption. Of these, 75 per cent were made by men and 25 per cent by women. Those in the age group of 46 to 55 years made the highest number of tobacco-related claims.
Importantly, the survey says 58 per cent of smokers in India do not own any form of health insurance. It reveals an average smoker takes five cigarettes a day, and half continue smoking as they feel doing so within limits does not lead to health issues.
A recent World Health Organization report said tobacco use was the single most preventable cause of death globally and was currently responsible for killing one in 10 adults worldwide. At the same time, it is not easy to get a health cover if you are a smoker or drinker. You need to undergo more rigorous medical tests and pay a higher premium. And, it takes just one cigarette to qualify you as a smoker. Of course, the norms only get stringent with the number of cigarettes you consume. But general and life insurers do offer a cover to those with such habits.
"Smokers can purchase health insurance. However, an insurance company may choose to reject or load for insurance, in case the number of cigarettes smoked regularly is beyond their acceptable levels. Smokers may also be asked to go through additional health check-ups, as insurance companies use the results to determine the risk factor and premium to be levied," says Antony Jacob, chief executive officer, Apollo Munich Health Insurance. There is no standard parameter across general insurers over which they load the premium or ask for additional check-ups. Your disclosure is enough to make the parameters stringent for you or deny you a cover (depending on your age and tobacco consumption level, among other factors).
Presently, no special conditions are imposed on health insurance policies issued to smokers. The policies issued to smokers are the same as those issued to non-smokers. However, going forward, products are being developed where a premium differential will be applicable to smokers vis-a-vis non-smokers, adds Sanjay Datta, chief, underwriting and claims, at ICICI Lombard. Typically, a heavy smoker above the age of 45 or 50 is asked to undergo additional medical tests before policy issuance.
But general insurance companies are planning to charge extra for such policyholders. Due to rising medical costs and high claims in their health insurance space, general insurers are staring at mounting losses. To tackle this, many have already increased premiums by 15-20 per cent this year for all policyholders.
And, with the new health insurance regulations also being effective from October this year, general insurers may look at parameters like smoking and determine the premium accordingly. Reason: These insurers will have to offer life-long renewals as against annual contracts now.
Shreeraj Deshpande, head of health insurance at Future Generali India Insurance, says the terms of a health policy don't normally vary (based on cigarette consumption) in hospitalisation or indemnity covers. "In critical illness, policy loading does vary with the consumption limit. More the consumption per day, higher the loading," he says. His company charges 10 per cent more to smokers for an indemnity plan.
It gets worse if you also drink. "A combination of alcohol and tobacco consumption raises the risk of diseases such as diabetes, kidney failure, cardiac arrests, and so on. Insurance companies consider people who consume both alcohol and tobacco as high-risk individuals," says Jacob. Based on a health assessment, the decision can vary from offering insurance at a higher premium to declining one. In the case of life Insurance, loading could be much more higher. Experts say depending on the results of medical tests, you will definitely be charged 15 to 25 per cent higher premium for a term cover. It could go as high as 55 per cent.
Of course, it would depend on the impact of smoking on an individual's health. "Generally, insurance companies seek information as on the number of years a person has been smoking and the quantity of cigarettes consumed, besides age, pathological test values (like cholesterol levels), blood pressure and so on. These questions help determine the terms and conditions or need to collect extra premium," says P Ravi Kutumbarao, head-technical, Bajaj Allianz Life Insurance.
| WHEN YOU LIE TO THE INSURER.... |
- Non-disclosure is considered fraud
- You get a wrongly underwritten policy, based on the information you provide
- If the insurer suspects/finds out non-disclosure later, it can reject the claim or deny further coverage
- Disclose correct information to insurers, as the claim amounts are large in both health and life plans
- Even occasional smokers/drinkers or those who have a history should mention this
- Many assume the Contestable Clause allows insurers to contest information only for a certain period; that's untrue
- Avoid agents who advise you against disclosing the truth to save a few hundred rupees
According to Rajeev Kumar, chief and appointed actuary of Bharti AXA Life Insurance, a smoker can be charged a premium higher by approximately 35 per cent against a non-smoker. A combination of smoking and drinking was considered co-morbid factors (that is, suffering from more than one type of disorder or habit at the same time), but are not seen in isolation. There are other factors like body mass index, personal medical history, family history and so on, considered in conjunction with this information.
Those who drink and smoke would be asked to undergo additional checks like liver function tests, before the insurer decides on the terms and conditions, in addition to the others mentioned.
And, those consuming alcohol or cigarette in the age group of 55 and above are most likely to be denied any cover because age-related risks exist.
The other problem is that most do not disclose such habits to insurers. In such cases, if something were to happen to you, your claim can be rejected if the hospitalisation or death was due to drinking or tobacco-related reasons. So, either you avoid smoking to save on high premiums or disclose and pay accordingly.