Synopsis: Insurers charge higher premiums for smokers and drinkers based on frequency and history, often using medical tests to verify self-disclosures. Full transparency is essential to avoid claim denials, as disclosing habits upfront ensures legal protection and coverage security despite the increased cost.
Regular smokers and heavy drinkers are considered risky customers by the insurers and are normally charged significantly higher premiums than the non-smokers and light, occasional drinkers. A small number of cigarettes or unspecified social drinking can alter the underlying of a proposal, or the treatment of future claims, even if a tiny number of cigarettes is taken or a spot of undisclosed social drinking is taken.
How Insurers View Smoking Habits
The insurers are not just interested in how many packets you are ordering daily; they are interested in whether you are taking nicotine in any form and how long you have used it. To the majority of Indian health and life proposals, any person who has smoked cigarettes, cigars, bidi, hookah, vaping, chewing tobacco or gutkha in the past 12 months is considered a smoker to charge, although the habit may be considered occasional or daily.
To prove self-declarations, the insurers may demand medicals and conduct cotinine (nicotine) tests, a positive test normally leads to classification as a smoker and premium band. The ex-smokers can only be reclassified as non-smokers when they have remained tobacco-free over a long duration of one to five years depending on the product and insurer.
How Insurers View Alcohol Consumption
The use of alcohol is typically divided into non-drinker, occasional/social drinkers, regular drinkers and heavy/binge drinkers depending on what you claim and what your medical records reveal. The occasional moderate drinking alone hardly ever results in premium loading in health insurance but frequent or excessive consumption and any medical indicators of alcoholism (such as liver evaluation condition) nearly always inspires premium increases or even exclusion.
In the case of life insurance, drinkers are regarded just like smokers: they are considered to have increased probability of getting a chronic disease like liver, some forms of cancer and heart diseases, hence their term and health cover is charged more. In case an insurer finds out later that serious alcohol consumption at the proposal time has been concealed, it may reprice, cancel, or deny claims associated with the coverage depending on the timing of finding out about the non-disclosure.
What is actually your premium motivator?
In a case where an underwriter glances at an application where it states that the person is a smoker or drinks, the premium is constructed to account on a combination of a few risk factors rather than a single behavior.
- Type/frequency of use: Greater number or number of days of cigarette or daily alcohol usually implies greater loading, occasionally at the cost of a 25-50% premium over non-smoker premiums on the same coverage.
- Time and history: Long-term users, those with a history of hospitalization or abnormal medical reports are rated harshly compared to short-term and light users with clean reports.
- Age and sum insured: A 50-year-old smoker who has purchased a high term or health cover is perceived to be much riskier – and will pay higher per lakh of cover – than a 25-year-old who smokes infrequently and has bought a small policy.
- Product: In health insurance the loading can be moderate with certain waiting periods, co-pays or exclusions whereas in term life insurance to be a smoker, the cost loading can be significantly high, in addition to specific waiting periods.
After a loading has been applied based on smoking, most insurers retain it throughout the life of the policy since the effect of tobacco may not fade away instantly even with the discontinuation of smoking. Others will revisit premiums based on proven long-term abstinence and clean medicals (after a certain period) but this has not been assured and is product-specific.
Also read: 8 Top-Rated Health Insurance Providers in India that Provides the Best Plans
Why Full Disclosure Matters
In the opinion of the insurer, smoking or drink is not the greatest risk but concealment of your smoking or drinking is. The use of tobacco and alcohol is specifically questioned in the application forms, and even occasional use should be reported honestly provided that the question includes any usage during the last 12 months. In case you make a false declaration or claim that you are a non-smoker/non-drinker and later medical records, test report or doctor notes prove it to be false, the insurance company can regard it as a misstatement. That can mean:
- Premium re-calculation back-dated loading or premium re-calculation on renewal.
- Denial or indemnification of claims, especially where the disease is directly related to tobacco or alcohol (such as lung cancer in a self-proclaimed non-smoker or cirrhosis in a self-proclaimed non-drinker).
Conversely, when you have made clear the disclosure of your habits and the insurer has a charged level of risk, it becomes extremely difficult to make them deny claims based on baseless reasons that you are a smoker or drinker. Although the disease may be associated with these practices, it is up to the insurer to establish a direct connection and can only refer to the terms of the contract that were included in the proposal accepted.
Important health advice for smokers and occasional alcohol users
To the individuals who smoke/sometimes drink, the aim is to stay insurable at an affordable price with the safety of claim-time.
- Be truthful and specific: State frequency, amount and time but do not simply say Yes or No, as the underwriter will distinguish between you and a heavy user.
- It is best to take some load, the cost of the habit, or not to take it at all, by false declaration; the cost of a denied claim is very great, compared with the cost of a slightly increased premium.
- Assuming you have given up smoking, you need to maintain some records, and when you are asked by the insurer or advisor by new policies when you could be reviewed as a non-smoker, the rule of thumb is at least 12 months of tobacco-free and clean test results.
- Comparing these plans and multiple insurers is a good idea as each company has its grid concerning the classification of smoker/non-smoker and alcohol use levels and the difference between the highest and the lowest restrictive company could be huge in terms of premiums charged to customers.
Conclusion
Insurance, however, can still be used effectively by smokers and occasional drinkers: it is important to disclose the information correctly, select the appropriate product and, with time, change lifestyle in such a way that the subsequent premiums and health risks would decrease as well.
Written By Jayanth R Pai
