That cigarette at a friend's wedding or the occasional vape during a weekend outing may seem harmless. But when it comes to buying insurance, even infrequent tobacco use can come with a hefty price tag.
Many insurance companies do not distinguish much between a daily smoker and someone who smokes only occasionally. In fact, a person who lights up just a few times a year could still end up paying 30-50% higher premiums than a non-smoker, as reported by Moneycontrol.
Why insurers don't see "social smoking" differently
Most people who smoke occasionally do not consider themselves smokers. Insurers, however, often follow a much stricter definition.
Many insurers classify anyone who has used cigarettes, cigars, chewing tobacco, vaping devices or other nicotine-based products within the past 12 months as a smoker. That means the "I only smoke at parties" argument may not carry much weight during underwriting.
"Even occasional or social smoking is relevant. It is best advised that complete disclosure of the information is made," said G Srinivasan, MD and CEO of Galaxy Health Insurance, as quoted by Moneycontrol.
The higher premium is linked to how insurers assess future health risks. Tobacco use, regardless of frequency, is viewed as a factor that can increase the likelihood of medical complications over time.
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The disclosure rule that policyholders can't ignore
Experts say the bigger issue is often not the smoking itself, but whether it was disclosed.
Insurance contracts operate on trust. Companies rely heavily on the information applicants provide while issuing a policy. Lifestyle habits, medical history, medications and family health conditions are all reportedly part of the risk assessment process.
The challenge is that there is no single industry-wide definition of a smoker. Different insurers may use different questionnaires and criteria. Because of this, applicants are advised to carefully read proposal forms and answer every question honestly.
It's not just smokers. Drinkers face scrutiny too
Smoking is not the only lifestyle habit insurers pay attention to.
As per a report by The Economic Times, alcohol consumption is also considered during underwriting, especially while issuing life and health insurance policies. Insurers typically ask applicants about the frequency and quantity of alcohol intake before deciding premiums and coverage terms.
"They enquire about consumption levels. Even if it's three drinks a day, the policy may be issued, but disclosure is essential," Amit Chhabra, Chief Business Officer, Policybazaar.com, told The Economic Times.
Experts say transparency can prevent disputes later, particularly during claim settlement.
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Can claims be rejected?
This is where things become more complicated. According to the ET report, non-disclosure of smoking or drinking habits can create problems if a claim is investigated. If insurers find that an applicant hid a habit that was specifically asked about in the proposal form, it could be treated as non-disclosure of a material fact.
"If an investigation reveals that the customer had failed to disclose alcohol or tobacco consumption habits, it could be treated as non-disclosure of a material fact, potentially leading to claim rejection or even policy cancellation," said Adarsh Agarwal, Appointed Actuary, Digit General Insurance.
However, claim decisions often depend on medical evidence. Experts noted that insurers generally need to establish a direct connection between the illness and the habit in question.
For example, proving that a particular case of lung cancer was caused solely by smoking may not always be straightforward. Conditions such as alcoholic liver cirrhosis, however, may present clearer evidence of alcohol-related damage.
What if you have quit?
Former smokers may eventually qualify for lower premium rates, but not immediately. As per Moneycontrol, insurers generally expect applicants to remain completely tobacco-free for 12 to 24 months before considering them for non-smoker pricing.
And insurers do not simply rely on self-declarations. Medical examinations can include tests that detect cotinine, a by-product created when the body processes nicotine.
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