Today is World No Tobacco Day, one of eight official global public health campaigns marked by the World Health Organisation. It aims to create awareness of the detrimental effects of smoking, which claims more than five million lives worldwide a year.
In South Africa, 7.7 million adults smoke and 44 000 people die every year as a result of smoking-related diseases.
There’s no denying that smoking damages health. It also destroys wealth: treating smoking-related illnesses is becoming increasingly expensive. Smokers have less disability and less critical illness cover than non-smokers.
Smokers are “shy to spend [on life cover] because they spend on their drug”, Anton Hartman, the head of distribution at Altrisk, says. According to Altrisk, smokers also pay about 80 percent more than non-smokers for the same amount of life cover – up until now, that is.
Kudos to Altrisk for introducing a life policy with a financial incentive for smokers to quit. This week, the specialist long-term risk-product provider announced the launch of the product to financial advisers in Cape Town. The new product, which is part of Altrisk’s new Proactive Risk offering, will be available from June 17.
Hartman says 70 percent of smokers want to quit – but 80 percent of them will fail unless they get help to kick the habit.
“With this in mind, we’ve designed a product that rewards smokers who commit to giving up. But instead of incentivising smokers for a reward later, we are giving smokers a special rating for two years while they give up smoking,” Hartman says.
Clients will also get tools and support to help them give up smoking for good.
Altrisk recognises that not all smokers are the same, and so it individually risk-rates them. The new product range also benefits people who have never smoked.
Hartman says a 45-year-old man could pay about R655 a month for risk cover of R1 million if he is a smoker. The Proactive rate for such a man is R443 – a saving of R212. A 45-year-old man who is not a smoker could pay about R350 a month for cover of R1 million. The Proactive rate for such a man is R224, or R128 less.
Altrisk’s new pricing will make the insurer highly competitive across the smoker class segment, Ryan Chegwidden, the executive head of product and technical at Altrisk, says.
In a nutshell, the product offers the client:
* The immediate benefit of a discount of 10 percent on Altrisk’s smoker rates if he or she intends to quit smoking (which you indicate on your application form). The discount, which is for two years from the start of the policy, applies once only.
* Access to tools – including an app and a 20-percent discount on the price of author Allen Carr’s course on how to stop smoking.
* Non-smoker rates if you refrain from smoking for six consecutive months.
* Guaranteed non-smoker rates if you refrain from smoking for 12 consecutive months.
At the six-month and 12-month intervals, cotinine tests are conducted to verify that you have not been smoking.
If you resume smoking after six months and before 12 months, the premium will be increased from that of a non-smoker to a smoker, but the other factors that determine your risk profile are not affected. For example, if you are someone who never incurs traffic fines or if you exercise regularly, this is still taken into account when determining your unique risk profile.
If the life insured does not stop smoking before the first anniversary of the policy, half of the 10-percent discount is forfeited.
If the life insured does not quit smoking before the second anniversary of the policy, the remaining half of the discount is forfeited.
Chegwidden says that smoking has been found to be the greatest avoidable cause of premature death and disability in the world.
Regardless of how long you have been a smoker or how much you smoke a day, stopping smoking is one of the best things you can do for your health and your finances, he says.
As a direct result of the higher cost of risk insurance for smokers, they tend to under-insure on their cover, which compromises their financial security and that of their loved ones in the event of premature death or disability.
Altrisk estimates that, instead of being able to afford R5 million in life cover, which would cost a non-smoker about R500, a smoker can get life cover of only R3 million for the same premium.
Michael Blain, the managing director of Altrisk, says the assurer was the first to design simple policies and to scrap arbitrary exclusions.
“We were the first to provide regular cover for people living with HIV as another chronic condition, and the first to scrap the two-year exclusion period that applied to policyholders who committed suicide,” he says.
Altrisk is now a division of Hollard Life. Its core focus is the specialised individual risk market. Although clients receive a Hollard Life policy document, the products and policies are assessed and administered entirely by Altrisk on behalf of Hollard Life.