Did you know losing weight, quitting cigarettes or alcohol have more than just health benefits? If you are planning to buy health or life insurance, these factors can help you to reduce your premium amount.
Buying or selling an insurance policy is based on the basic principle of ‘utmost good faith’ between the insurer and the client. And for this, the client needs to make relevant declarations at the time of buying the policy. Hiding a few facts may help you buy a policy where you need to pay lesser premium but “the insurance company won’t pay the claim if there’s lack of appropriate declaration and misinformation to reduce the premium amount from the proposer’s side, a company won’t be able to price that risk accordingly,” said Bhaskar Nerurkar, Head, Health Administration Team, Bajaj Allianz General. So, non-declaration may have an impact on the claim if the doctor can relate the ailment to be caused by something like smoking or drinking.
Some of the severe diseases caused by smoking are lung cancer, chronic obstructive pulmonary disease, heart disease, asthma, stroke, diabetes, secondary cancer, reproductive effects in women, premature and low birth weight babies. Health risks linked to heavy alcohol consumption include liver disease, pancreatitis, immune system dysfunction, ulcers and gastrointestinal problems, brain damage, malnourishment and vitamin deficiencies, osteoporosis, cancer, stroke and cardiovascular disease.
According to World Health Organisation (WHO) factsheet 2018, most people in India start smoking early (on an average 18.7 years) increasing the risk of heart disease in younger people. Currently, there are 26.68 crore tobacco users in India and a substantial number of people exposed to second hand smoking are at increased risk of cardiovascular diseases (CVD), which is the biggest reason of death due to smoking. CVD death caused by tobacco use for a year stands at 4,49,844 deaths, 16 per cent of all CVD deaths each year. Tobacco kills more than 10 lakh people each year accounting for 9.5 per cent of all deaths. WHO further projects that in 2025 around eight per cent of the Indian population (approximately 83,514,000 persons) will be smokers.
Non-disclosure of smoking or drinking status varies from insurer to insurer, however, concealing information may lead to the repudiation of claims to cancellation of the policy. Industry experts explain that it is always advisable to disclose everything with utmost honesty and transparency while choosing a health cover. This is imperative for better claims experience at the time when you need it the most.
Apart from lifestyle habits, there are various other factors that are considered while deciding on one’s health insurance premium. The proposer must also declare any pre-existing diseases before buying a health insurance policy. In most cases, the claim is payable, if the disease is diagnosed during the policy period. Another critical factor is age. Also, the risk loading may get applied for customers with medical or health conditions like obesity, hyperlipidemia, asthma or lifestyle disease like diabetes and hypertension. Such proposers can be expected to shell out a higher premium for health policy as they are more susceptible to severe medical conditions.
Many life insurers provide term plan as well as many other plans without medical examinations. In case of health insurance plans, most of the insurers approve a policy without medical examinations. However, in case of a plan where a high sum is insured, medical examinations are mandatory and premiums are charged based on the medical reports.
In general, older people are supposed to pay a higher premium and vice versa. However, it is not always applicable as in cases of non-smoking older policyholders. If younger policyholder is a smoker and has declared the information in the proposal form then they are likely to pay a higher premium than the older non-smoking policyholders.
The above illustration clearly shows a smoker end up paying Rs 5,073 extra as premium. In 30 years, the policyholder will end up paying (30x5073) Rs1,52,190 extra just for the same reason.
In India, most of the life and health insurers charge same premium through out the policy term to mitigate the future claim risk in view of adverse health impact. This means quitting drinking and smoking or reducing body weight after buying the policy would not impact the premium. However, there are few service providers including Reliance Health Insurance, who understand the importance of healthy living and appreciate policyholders who are willing to take corrective measures towards better health.
Ravi Vishwanath, ED and CEO, Reliance Health Insurance, said, “A policyholder with an added premium loading can approach and request for a re-assessment after four years of policy renewal. We would evaluate and change the premium based on the current health status. In addition we give a guarantee that re-evaluation will not attract any upward increase in loading in case we find an adverse condition to make our customers confident in approaching us.” A good news for people who are ready to take corrective measures.
nirmala@outlookindia.com