No tobacco day: Does smoking increase your health insurance premiums?

While smoking is a known health risk, not all health insurance companies automatically charge smokers higher premiums. Here's what you need to know:

When it comes to health insurance, most smokers fear that insurers will consider ailments that may arise in future due to their smoking habits and reject their proposal/claims. Nearly one-third of people avoid buying health insurance due to the fear of application rejection. However, such concerns are unnecessary.

Smoking or pre-existing ailments don't automatically restrain you from getting a health cover. It’s just that companies get a little more cautious while examining such applications. It is a misconception that if the proposer is a smoker, the application for policy purchase will be rejected without any second thoughts. In India, smoking, by itself, does not lead to premium loading or rejection of policy applications. However, if smoking has resulted in health complications at the time of making the proposal, it can affect the insurer's decision to issue you a policy.

 

"Contrary to popular belief, smoking doesn’t increase health insurance premiums. While it is widely known that smoking can lead to numerous health issues, most insurers do not have lifestyle-based loading. This ensures that smokers are not singled out for higher costs solely based on their smoking habits, which makes health insurance more inclusive and affordable for all, regardless of their lifestyle choices. However, it is best to add critical illness cover to your plan for protection, as this can provide additional financial security in case of critical illnesses such as cancer. We have seen that in the last one year, claims for lung or oral cancer related to smoking constituted approximately 5% of total health insurance claims," said Siddharth Singhal, Business Head, Health Insurance, Policybazaar.com.

According to the World Health Organization's Global Tobacco Epidemic Report 2023, India has around 267 million tobacco users, making it the second-largest consumer of tobacco worldwide. Smokers are more susceptible to chronic heart and lung conditions, such as stroke, heart diseases, respiratory diseases, and cancer. Given these heightened risks, it is crucial for smokers to have adequate insurance coverage.

"While insurance coverage is available for smokers, it often comes with higher premiums due to the increased health risks. Insurers typically require detailed medical examinations before providing coverage, distinguishing between occasional and regular smokers. Smokers should consider high-risk health coverage and be mindful of medical inflation to ensure they are adequately covered," said Dr S Dheeraj Krishnaa, Head - Wellness and Telehealth, Star Health Insurance .

Smoking and Insurance: It depends

Disclosure Matters: Be honest about your smoking habits when applying for a policy. Insurance companies often ask about smoking frequency, and this can influence their decision.

Severity of Smoking: Occasional or social smokers might not see a premium increase, but regular smokers might face "premium loading" (higher premiums) or exclusion of certain health conditions from coverage.

Health Status Matters: For smokers with pre-existing conditions like diabetes or hypertension, the severity of the condition determines how insurance companies respond. Young applicants (under 45) might be asked for medical tests if they smoke or have lifestyle diseases.

"Insurers underwrite policies based on an objective evaluation of the risks posed by an individual's lifestyle and medical history. Insurance companies review the frequency, duration, and existence of any co-morbid conditions related to smoking during underwriting. If you have smoking-related health issues, these may be classified as pre-existing conditions (PEDs). This can significantly raise your premium or even make it difficult to get coverage. The premium increase for a smoker may be lifelong as the health risks persist," said Priya Deshmukh – Head – Health Products, Operations Services, ICICI Lombard.

If smoking is considered a PED, there might be a waiting period before the policy covers claims related to that condition. Quitting smoking during this waiting period would not change anything, as the policy contract is based on your health status at the time of application. The severity of the increase in premium depends on how much and how long you have smoked, and if you have any smoking-related health problems.

"For example -  In case you are an occasional smoker, it may not be considered as a Pre Existing Disease(PED) and you can get a health insurance policy without additional premium. However, in case you are a chronic smoker, you may have to pay additional premium to mitigate the risks accompanying the habit.  But, in case of any related chronic respiratory ailments detected along with prolonged smoking history, your health insurance request form may get rejected all together denying coverage," said Deshmukh.

 ICICI Lombard's paid claims for lung and oral cancer over the last two financial years (FY):

Lung Cancer:

FY 2023-2024: Approximately 1,100 paid claims

FY 2022-2023: Approximately 900 paid claims

Average claimed amount: Up to Rs. 1.25 lakh (Rs. 125,000)

Oral Cancer:

FY 2023-2024: Approximately 1,300 paid claims

FY 2022-2023: Approximately 1,100 paid claims

Average claimed amount: Up to Rs. 2 lakh (Rs. 200,000)

Key Observations: There appears to be an increase in the number of paid claims for both lung and oral cancer in FY 2023-2024 compared to FY 2022-2023.

The bottom line:

• Honesty is Crucial: Hiding your smoking habit or pre-existing conditions can lead to claim rejections later.
• Shop around: Compare policies from different companies. Some might be more lenient towards smokers, especially occasional smokers.
• Expect scrutiny: For smokers with pre-existing conditions, especially severe ones, getting coverage might be difficult or expensive.