4 myths that could go up in smoke

Surveys say that about one-third of people avoid buying health insurance as they are apprehensive of facing a rejection by insurance firms. Smoking does not necessarily exclude you from buying a health cover. It’s just that insurance companies get a little cautious – and justifiably so. Here, we demystify some of the myths.

Health insurers do cover smokers, given that this segment of the population is fairly large today. In some cases, the premium is higher, but there is no outright rejection of the proposal - unless the individual is a chain smoker and is addicted to tobacco. Aditya Birla Health, for instance, rejects individuals who smoke over 20 cigarettes a day. In the case of Apollo Munich, for those who smoke over 10 cigarettes, there will be a premium loaded on, although of course the proposal could be rejected based on the results of underwriting.

Medical underwriters look at various factors, including the duration for which the individual has been using tobacco, his/her daily tobacco consumption and the status of the person’s health. Some insurers ask for medical tests only if the prospect is over 40 years old or is wants a cover for a high sum insured – say ₹5 lakh or more. If the medical test reveals any health complication, the insurer may exclude the specific ailment under the policy in the initial years. So there is never a blanket rejection if you are a smoker, although there are lots of disincentives..

Every insurance policy has a section on health where the individual needs to answer questions on his or her tobacco consumption. Even if you are a social smoker or have long ago given up smoking, you need to disclose it. Anika Agarwal, Senior Vice President and Head - Marketing, Digital & Direct Sales - Max Bupa Health, says, “It is solely on the basis of a self-declaration that the insurance company comes to know about a customer’s status as a smoker or a non-smoker. Our research says that only about 1 per cent of people willingly disclose that they smoke. But if at a later stage, it is found that the customer did not disclose this crucial information, it would be seen as wilful non-disclosure of material information, which might lead to cancellation of the policy.”

So, not disclosing your smoking habit will nullify the very objective of your buying a policy.

For life insurance covers, smokers typically pay a substantially higher premium than non-smokers, since the insurer cannot increase the premium for the next 20-25 years. But with health plans, the insurer has the leeway to increase the premium in two-three years’ time, based on the insured person’s age or the claim experience in the portfolio. For this reason, the premium is not way too steep, say experts. Today, most insurance companies, in fact, do not ask for a higher premium for smokers provided there is no health complication. Some insurers such as Apollo Munich, however, load the premium for individuals who smoke more than 10 cigarettes. But if you check online, the rate for both smokers and non-smokers will be the same; the premium changes only after underwriting is done, on the basis of a medical test.

You should never lie to your insurer about your health status. If you have disclosed the facts about your health at the time of signing up for the policy, even if you are a smoker, your claim will not be rejected. Sasikumar Adidamu, Chief Technical Officer – Non-motor, Bajaj Allianz General, says, “At Bajaj Allianz, any claim arising out of smoking is generally not repudiated. The client may be asked to pay additional premium for non-disclosure of the habit. But if we find out that he has knowingly concealed facts, we will reject the claim.” Some insurers do not insist on disclosure of smoking habits, but want facts about the health condition to be revealed. Royal Sundaram’s Chief Product Officer Nikhil Apte, says, “A claim will not be rejected per se for non-disclosure of a habit, but more due to non-disclosure of any related ailment.”

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