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Home >Opinion >Don’t hide your smoking habit from the life insurer

A young professional, A, who smokes occasionally during parties does not disclose his smoking habits while filling up his life insurance application as he thinks it’s not important since he is not a regular smoker.

This is a usual dilemma for occasional smokers while applying for a life insurance cover. They are apprehensive because of two reasons: first, what will happen if the life insurance company finds out that he smokes occasionally; and second, is an occasional smoker treated the same as a chain smoker?

Life insurance companies want their customers to be in good health. Disclosing your smoking habits becomes even more important in pure risk products like term plans, where the premium rates are low. In such plans, insurers may offer three different premium classifications in certain products: smoker, non-smoker and preferred non-smoker. The classification allows the insurer to reward you with lower premiums if you are keeping good health and haven’t smoked at all, thereby reducing the risk on your life. A standard non-smoker rate can be given only if you have not consumed nicotine in the past 12 months to three years. While the underwriting standards vary from company to company, the rates for smokers are much higher in most companies.

Who is considered a smoker by a life insurer?

A life insurance company would consider you a smoker if you answer “Yes" to the question on smoking in your application. Being classified as a smoker refers to your use of cigarettes, cigars, hookah, e-cigarettes and chewing tobacco. Even using a nicotine patch or gum can qualify you as a smoker. Most life insurance companies usually check for any form of nicotine use.

Whether you have regularly consumed nicotine products (within a specified time frame) or you smoke a few cigarettes occasionally, your answer in the form should be a “Yes", as this still falls in the smoker category by insurance standards. Smokers pay nearly 1.5-2 times the premium for non-smokers for online term plans. This is a key reason that instigates occasional smokers to refrain from mentioning their smoking status in their insurance applications.

Given the competitive rates for pure term plans, it becomes extremely important for life insurance companies to thoroughly scrutinise your medical details, especially for a non-smoker’s application, by examining blood and urine samples.

Since the life insurer has to pay the claim to a family if the policyholder dies, it is imperative to be honest and clear while filling an insurance application form. It is a legal contract between the insurer and you. Insurance companies can immediately identify smokers who have claimed to be non-smokers during the underwriting process. This may lead to your application getting rejected instead of being offered a smoker rate. Life insurers also perform pre-issuance verification calls in which applicants are once again asked, among other things, to confirm about smoking. They reiterate the importance of this aspect while offering an insurance cover. These one-on-one conversations help them spot inconsistencies in the application and identify smokers.

It might sound harsh, but lying about being a smoker or hiding the fact can lead to severe consequences. It is imperative for the applicant to disclose correct information as any material misleading information can be a reason for repudiation of the claim. The life insurance company reserves the right to call a policy in question within three years in case of a claim, or even otherwise. Being truthful about your smoking habits from the beginning will ensure that you derive the benefits of the policy and will be beneficial to you in the long run.

Generally, the lifestyle and habits of a person do not change significantly in a short period of time. All life insurance companies lay emphasis on answering questions truthfully at the time of application as they may not check if you have started smoking after the policy is issued. However, in case you start smoking after purchasing your life insurance policy, you should inform your insurance company about this change.

What if you are a smoker and want to quit?

If you are a smoker or have quit smoking very recently, you should not get dissuaded by the higher price you have to pay for your habit. The golden rule is not to defer the decision of buying a life insurance policy as that would leave your family vulnerable. Find the best price that you can get being a smoker and get yourself and your family secured. With stressful lifestyles and rising premium rates, it is important to start planning early and have coverage in place in case of any health issues in future.

Once you quit smoking for more than a year, you can re-apply for a plan as a non-smoker and get a lower rate available at that time.

By disclosing your smoking habit to the life insurance company, you ensure that your family has a hassle-free experience should the situation arise in which they have to make a claim. After all, the very purpose of buying the life insurance cover is to financially secure your loved ones’ lives.

Munish Sharda is managing director and chief executive officer, Future Generali India Life Insurance Co. Ltd.

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