The noxious effect of tobacco on the common people of society must be made aware of, says Atri Chakraborty, Chief Operating Officer, IndiaFirst Life Insurance, as we observe ‘World No Tobacco Day’ on Wednesday.
In an interview with MintGenie, Chakraborty said that those seeking insurance should disclose all facts correctly and allow the underwriter to assess the risk and decide on the insurability.
Edited Excerpts:
Q. Life insurance premiums are higher for smokers. Yet, many people continue to smoke. How many people in percentage terms reveal their smoking habits while buying policy?
The disclosure rates for smoking are extremely low in the life insurance industry. We may look at this scenario considering two segments of insurance product offerings which are term and non-term. We observed the disclosures on smoking habits are usually higher in term plans than the non-term plans and that is primarily due to increased customer awareness and specific medical tests that are being conducted to establish smoking/non-smoking habits. Overall, the percentage of customers declaring smoking habits is around <0.5%.
Q. Do life insurance companies hesitate to agree to a high claim insurance application by smokers owing to the increased risk of diseases or untimely death among them?
There are multiple clinical studies done by the medical and insurance fraternity where the studies suggest that extra mortality is associated with smoking. Thus, the life insurance companies charge extra premiums for smoking habits (smoker/ non-smoker rates) or reduction of cover, if there are other comorbidity factors (obesity, diabetes, hypertension, heart ailments). In some scenarios, the insurance companies may reject coverage if the person with smoking habits has poor control over his/ her blood pressure, sugar levels and is grossly obese.
Q. What is the percentage of life insurance payout claims made by the nominees of deceased smokers?
It is less than 0.01% but that is primarily because of the non-disclosure of the smoking habits.
Q. What's the ideal policy for people with a high risk of morbidity due to smoking?
It would not be appropriate to call out the type of policy which is suitable for smokers as there are many other factors that add to the increased risk of mortality and every insurance policy is based on the principle of mortality assumptions. Hence, it is more important to disclose the lifestyle habits and existing ailments in all aspects, basis which, the underwriter will be able to rightly assess the insurability of the person.
This will also ensure that untimely demise leading to claims will not be considered as adverse as it was disclosed at the proposal stage. Hence, we would suggest that life assured should disclose all facts correctly and allow the underwriter to assess the risk and decide on the insurability.
Q. How much difference do you think "World No Tobacco Day” makes in awareness?
Definitely, the noxious effect of tobacco on the common people of society must be made aware of. This will help us to reduce the burden on our health system. Observing “World No Tobacco Day” helps.
