Smoking – A Health Hazard
Smoking is a serious health hazard and is injurious to health. The effects of smoking are grave. Smoking can affect any organ of the body and is life threatening too. Tobacco smoking is the most common form of smoking across the world.
Smoking may impact the lungs, heart, brain, bones, vision etc., Smoking is considered to be a silent killer which contains more than 4000 chemicals of which 250 are known to be detrimental and more than 50 are identified as cancer causing chemicals. People who smoke are prone to various types of cancers in the lung, tongue, mouth, throat, bladder, etc.,
Smoking affects the smoker’s complete body, resulting in fatal diseases like Chronic obstructive pulmonary disease (COPD), Emphysema, Tuberculosis, Chronic bronchitis, Cardiovascular disease, etc. Smoking has ill effects for the smoker and the people around the smoker inhaling the second-hand smoke. Second-hand smoke kills.
Second-hand smoke (passive smoking) is referred to as “the smoke that fills enclosed spaces like restaurants, offices or shops when people consume tobacco products such as cigarettes, bidis, pipes, cigar, etc.
Statistical Data on Smoking
As per WHO (World Health Organization) Data on Smoking dated July 2015:
- 6 million people each year die because of tobacco usage.
- More than 5 million of such deaths are due to the direct tobacco usage and more than 6,00,000 deaths of non-smokers inhaling second-hand smoke.
- Roughly 80% of the more than 1 billion smokers worldwide live in low and middle-income countries, where the burden of tobacco-related illness and death is heaviest.
- Tobacco users who die prematurely deprive their families of income, raise the cost of health care and hinder economic development.
- In some countries, children from poor households are frequently employed in tobacco farming to provide family income. These children are especially vulnerable to “green tobacco sickness“, which is caused by the nicotine that is absorbed through the skin from the handling of wet tobacco leaves.
- There are approximately 120 million smokers in India.
- India is home to 12% of the world’s smokers.
- Approximately 900,000 people die every year in India due to smoking as of 2009.
- As of 2015, the number of men smoking tobacco in rose to 108 million, an increase of 36%, between 1998 and 2015
- One million of the tobacco deaths occur in India.
(Source: News Article dated 31st May 2015 in Indian Express)
Who is considered as a SMOKER for an Insurance Company?
The smoker may be an occasional smoker or a regular smoker. There are different kinds of smokers prevalent around us. But for an Insurance Company there is no demarcation between the kinds of smoker. For insurance companies, there is no difference between an occasional or a regular smoker.
A person either 1 cigarettes or 10 cigarettes in a day is deemed to be a Smoker for an Insurance Company.
Life insurance companies ask very precise questions from the life to be insured to categorize him/her as a SMOKER or a NON SMOKER.
Smoker in Life Insurance parlance is the one who consumes NICOTINE/TOBACCO in any form and quantity like cigarettes, bidis, cigars and chewable tobacco items like Pan Masala or Khaini, etc. Usage of a nicotine gum may also be considered for a qualification of a SMOKER.
Types of Smoking related questions in the Proposal Form asked by the Life Insurance Companies are:
- Do you take tobacco products?
- Do you smoke?
- Did you consume tobacco products in the last three/five years?
- Have you ever consumed tobacco products?
YES to any of such question will put you in the SMOKER Category.
Example: Max Life Insurance defines an individual into a Smoker category if, in the last three years, you have consumed any Tobacco/Nicotine products which include Cigarette, Bidi, Cigar, Gutka, Flavored Pan Masala,Khaini,etc. If not you are classified as Non Smoker.
Risk & Life Insurance
Life Insurance policies are long term contracts and are granted on the basis of Underwriting.
Underwriting is the process of assessing risk in the life of the insured person and specifying the cost in terms of Premium for the Life Cover (Sum Assured). Life Insurance companies assess the vital factors related to the life to be insured, before granting the life insurance policy to ensure that the insurance company’s have a healthy pool of people which are insured with them.
Granting life insurance to everyone without risk analysis will hamper the profitability of an Insurance company.
There are 2 kinds of underwriting which is Medical and Financial Underwriting done at the insurer’s end before getting into a Life Insurance contract with the insured.
- Medical Underwriting is done to assess the physical & health risk in the life to be insured. Medical Underwriting vital factors involve parameters like Age, Personal Health Status, Family History, Occupation, Pre-Existing Disease, Smoking & Drinking Details etc.
- Financial Underwriting is done to assess the premium paying capacity of the insured against the chosen sum assured basis the factors like Income, occupation, Other life Insurance Policies details, etc.
Basis the analysis of the risk in the life of an insured, the Insurer decides on either;
- Granting the Life Insurance on Regular Premium Rates
- Granting the Life Insurance on Higher Premium Rates (Due to an extra risk in the insured’s life)
- Declining the Life Insurance Proposal (Due to uninsurable risk in the insured’s life)
Impact of Smoking on Life Insurance Policy
Smoking is a serious health hazard, it is a fact known to all and is discussed above also. When a person smokes, it affects his body and health drastically in the long run. The probability of the disease or critical illness is higher during the lifetime of a person who smokes. Deteriorating health may also cause early death of the person habituated with smoking.
From an Insurance Company’s point of view the risk in a smoker’s life is more and avoiding such risks will prove to be a loss to the Insurance company and will affect the company’s profitability. The risk of dying early is probable in the case of the life to be insured who smokes. The Insurance company has to pay a death claim to the nominee in case of such scenario’s leading to a rise in death claims.
Does it mean that the person who smokes is not granted a Life Insurance Policy?
The answer is that the insurance companies charge HIGHER PREMIUMS from an individual who smoke basis the higher risk involved in his life. If the risk is very high which is beyond the underwriting guidelines of an insurance company, it may decline the proposal as well.
Higher the Risk, higher will be the Premium. The premium charges are higher for a person who smokes as compared to a non smoker. Especially when it is a pure protection plan like TERM INSURANCE offering higher sum assured at a nominal cost and where the insurance company has to pay a death benefit in case of insured dies during the term of a policy.
Examples of Premium Differential (Smoker Vs Non-Smoker)
Premium Difference for a Max Online Term Plan, Age: 32 years, Sum Assured: 50 Lakh, Term 30 years.
For a SMOKER, Premium Amount = Rs 6,750
For a NON- Smoker Premium Amount = Rs 4,450
Eye Opener : The difference in the Premium is Rs 2,300 (Rs 6,750 – Rs 4,450) which is 51.68% of a non smoker premium price. The Premium for a Smoker is priced at more than 50% cost, higher than a non Smoker premium price.
Concealing Smoking Details is a NOT a Way Out
Contract of Insurance is based on the “Principle of Utmost good Faith”, where life to be insured is required to disclose, correct details and material facts asked by the Insurer in the proposal form. Any Misrepresentation or Concealment of facts may lead to the contract being null and void and the benefits in the Life Insurance policy are forfeited.
Concealing or misrepresenting the smoking details is not a solution to seek Life Insurance Policy. The insurance company may repudiate the death claim basis the non disclosure of the material fact, like “Smoking” which will defeat the entire purpose of taking a life insurance policy. Your family is unable to receive any Claim benefits from your life insurance policy in case of hiding the smoking details which is caught by an insurer.
Life to be insured also has to undergo the Medical check up before getting a Life Insurance policy in case of high sum assureds. The intent is to have a snapshot of the physical status of a life to be insured which will also disclose the details of Smoking in the report.
So, it is important to disclose the smoking related details correctly to your Insurer at the time of taking the life insurance policy. In case you don’t smoke at the time of taking the policy, but adapted the smoking habit post that, it is advisable to let your insurer know about it to avoid any future consequences.
As the saying goes” It is better to be safe than sorry”. So, it is better to pay higher premiums rather concealing the details and leaving your loved ones vulnerable in case of your absence.
Smoking will impact the cost of your Life Insurance, which is the Premium. Smoker’s are bound to pay Higher Premiums for the higher level of health risks involved in their life. Quitting Smoking will enable you to get a standard premium rate for buying a life insurance policy and will make you healthy and hearty too.
This is a guest post by Harjot Narula.
About the Author
Harjot Narula is the founder and CEO of comparepolicy.com, an IRDAI approved insurance web aggregator focused on selling online insurance plans of various companies. Harjot has more than a decade of experience in software development and has also spent 5 years in US working for the mortgage and risk management industry.
(Disclaimer: Comparepolicy.com is not biased towards any insurance company. Examples given in the blog are for the knowledge of users only)
Kindly note that Relakhs.com is not associated with Comparepolicy. This post is for information purposes only. This is a guest post and NOT a sponsored one. We have not received any monetary benefit for publishing this article.
(Image courtesy of zdiviv at FreeDigitalPhotos.net) (Post Published Date : 23-May-2016)