While buying insurance online, the toughest part for most customers is answering the medical-and lifestyle-related queries in the proposal form. Some questions are general, but some are specific and relate to medical condition, profession and hobbies of the buyer.
Sample these questions. Has your weight altered by more than five kg in the last two years? Have you been incapable of working for more than five days in a week in the past two years? How many cigarettes do you smoke in a day and/or how many pegs of alcohol do you consume in a week?
Why would the insurer like to know how many cigarettes you smoke or how much liquor you consume? Do the answers to these questions have a bearing on your insurance premium?
The answer is yes. Hence, it is important that you answer all questions correctly.
"Present and past medical conditions, insurance history, personal and family health, lifestyle habits, etc, have an important bearing on risk and, therefore, product pricing," says Mayank Bathwal, deputy CEO, Birla Sunlife Life Insurance.However, answering these questions can be tricky, especially for a person who is buying the policy on his/her own. We assess these questions and how they can impact the underwriting process.
The questions asked in a life or health insurance application form can be generic or very specific. The difficulty level may vary accordingly. The answers are mostly in yes or no. If the answer to each question is no, the process is hassle-free if the declarations are true.
However, if the answers are yes, the company seeks further explanations and in some cases even documents so that it can decide the premium or whether to accept your application.
"The purpose of asking about the person's health is to ascertain his well-being. If any risk is noted, further tests may be sought on the basis of sum assured and the person's age," says Bathwal of Birla Sunlife Life.
So, if your answer to the question whether you are a smoker is yes, you will be asked what you smoke (cigarette, beedi or cigar), how many do you smoke in a day and for how many years have you been smoking. If you say you have stopped smoking, you will be asked when and why.
Explanations and documents may not always be difficult to furnish. However, at times, understanding questions, especially the ones related to health, could give you a hard time.
Take, for instance, this question. "Have you undergone/have you been recommended to undergo any of the following: angioplasty, heart bypass surgery, brain surgery, heart valve surgery, aorta surgery or organ transplant or any other major surgery or treatment?"
The use of medical terms, which most people may not be aware of, makes things difficult for the buyer. For instance, you need to be a biology student or a medical practitioner to know which diseases are considered congenital.
Further, it is possible that you have not undergone any of the above mentioned surgeries but some other surgery. Should you mention this in the column 'other major surgery or treatment' category?
Then there are questions that are sure to put you in a fix. So, if the insurer asks if you have experienced any health problem or medical condition within the past three months for which you have not consulted a doctor, what should be your answer? Even if the answer is yes, you will probably not know the name of the condition from which you suffered.
As a result of these issues, insurance companies, which were aggressively promoting online sales, have witnessed very low conversion of online enquiries into sales. The companies are trying to address the issue by starting online assistance, 24X7 call centres etc. Some are even selling online policies through agents.
"To help customers during purchase, we have set up a 24/7 customer helpline. Customers can connect with our telesales advisors through our toll-free number at their convenience. We also call customers who leave their details on our website and assist them through the buying process," says Sevantika Bhandari, director, marketing, Max Bupa Health Insurance.
"Some questions are very technical in nature and so customers may find them difficult to understand. We have tried to translate such questions into a simpler language," says Anuj Gulati, CEO, Religare Health.
IMPACT ON UNDERWRITING
Based on these declarations, the insurance company assesses the risk involved in insuring the applicant and accordingly fixes the premium. In some cases, it will ask the buyer to undergo medical tests before issuing him the policy.
So, who is a bigger risk for a life or health insurance company-a person who smokes or one who consumes alcohol?
"In term insurance procedures smokers get impacted directly as there are separate slabs for smokers and non-smokers. There is nothing like this for drinkers," says Yashish Dahiya, CEO and cofounder, Policybazaar.com.
This means if you are a smoker, you will pay a higher premium than a non-smoker for a life or a health insurance policy.
If you are in a 'hazardous' occupation or love adventure sports, then also you fall in the higher risk category. The insurer may even reject your request for insurance in such a case.
"If an applicant is involved in adventure sports or lives in a life threatening environment, the insurer can accept the application, reject the application, accept it with exclusions or accept it after premium loading," says Sevantika Bhandari.
Even in case a 'healthy' person's family has a history of diseases such as cancer, diabetes or heart problems, he is usually asked to undergo a test to determine if he/she is susceptible to genetic diseases.
"Based on the results of these tests, the policy can be rejected, passed or passed with restrictions or loading. There is no set rule for such scenarios. It's a subjective call taken by the underwriting team," says Dahiya of Policybazaar.com.
In chronic conditions, where repeat hospitalisation is all but sure, the decision to issue a policy is taken on the basis of medical tests.