tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Tuesday, October 15th, 10:02AM

News

rss
Latest Headlines

Smoker or non-smoker? Are you sure?

Recently, I've had an interesting discovery with a client coming of age on their parent's policy, and they were transitioned to their own cover on smoking rates without any input or questions from the client.

Saturday, November 25th 2023, 6:25AM 3 Comments

by Jon-Paul Hale

Yes, that's correct.

I dug a bit deeper, and I found this was in the policy wordings, the old Tower Premier Health policy. It was changed sometime in 2007/2008 to pick up auto allocation of smoker rates when continuing a child on to adult rates and policy.

This prompted me to question the long-held assumption: are non-smoker rates non-smoker rates?

Thankfully, the majority of the answers from providers came back with the answers we all expected.

In general terms, a couple of exceptions do exist:
* If the person has not smoked for 12 months, they can be considered a non-smoker and have non-smoker rates for new cover.
* If the person ceases smoking for 12 months, they can request to move to non-smoker rates on their existing policy.

Southern Cross doesn't specifically rate for smokers; they won't give the 10% healthy living discount for a new cover, but they will get the 10% low claims discount after two years if they have low claims.

Where this seems to get wobbly is with nib.

Talking to a senior manager at nib back in June, it appears my client slipped through on some work nib had completed when moving children to adult rates migration not to change to non-smoking rates automatically.

This raises some questions; the policy wording for Premier Health is where this example was; however, looking at the Ultimate Health policy wordings, the same smoker rates transition for this product range applies, too.

This is where product and operations often have differing opinions, and "how we have always done it" sometimes isn't appropriate.

I've made my points on the Southern Cross changes, removing a stalwart of medical policy structure we have all known forever. Most advisers don't know about this historical change in the background of Tower's policy until they trip over it with a client like I did.

Another one to remember is the old OnePath Major Medical cover; the excess applies per claim, not per policy year like the rest.

Overly familiar understanding of policy structures can trip us up, so we rely on research companies to double-check things and ensure that changes slipped under the mat aren't missed.
* That's a plug for having a research provider in your business!

The flip side of my deeper dive into medical policy wordings, which is dramatically in nib's favour, is unfunded or non-Pharmac medicines; nib starts paying claims if the medications are related to a hospital admission.

This is significantly better than the cancer diagnosis or life-threatening condition criteria in other medical policies.

With all policies, there are pros and cons of a particular approach, and my point here is that "selling" a policy on a square peg round hole approach is not what is expected of us any more.

For the life adviser segment that does medical insurance as an "extra", medical is not an "extra". Medical insurance is now a core risk aspect for people and has been for quite some time.

The approach to medical insurance of 'Do you want fries with that?' has to change.

The products are significantly more complex, and the nuance of application with the abysmal response of the public health system demands we do better.

In this quest to clarify the approach to smoking/non-smoking, one provider mentioned they canvassed operations staff on the subject and got a surprising response that half knew the rules and half didn't.

That provider acted swiftly to define the rules and make staff aware of them so that things operate as we expect them to. Well done on doing this; we all benefit from the consistency.

Overall, I'm pretty happy with nib's response and management of the smoking issue, but their policy wordings needs a tidy-up to match how they operate.

My final poke at nib comes with two questions on the clause below;
1. How do you police this?
2. And do you really expect non-smokers taking up smoking to advise you?

Current Ultimate Health Max wording:

Changing the insured person's smoking status

If the smoking status is not known, smoker Premiums will apply. If any Insured Person (aged 21 years or over) changes their smoking status (including any tobacco or any other substance), they must complete an nib smoking status questionnaire and send the completed questionnaire to us. We will require at least 30 days' prior notice before this change will be applied on the policy.

I'm expecting that this is to change from smoking to non-smoking, and non-smoking to smoking will be ignored.

That said, this issue with smoking/non-smoking for kids to adult products also applies to some of the life & trauma products we come across.

But then again, you really don't know what you'll find in a policy wording until you go poking around ;)

Tags: Jon-Paul Hale

« Passbacks - How do they work?Nominated beneficiaries and estate processes »

Special Offers

Comments from our readers

On 26 November 2023 at 9:14 am JPHale said:
Since sending this to GR for publishing nib have come back and confirmed they are not requiring non-smokers that take up smoking to move to non-smoking rates.

There's a few things in the nib policiy wordings that aren't matching the reality of operations, and this needs a tidy up.

As many of us have expereinced, while we have policy wordings that are different to the operation of the policy like this (operations being more favourable than the wording) it only takes a change of management or a different lens and things get changed to be far more difficult and unworkable.

A good example of this is the old Sovereign Group MajorCare where terms have been applied to the policies on continuation that are quite different to the rules of the cover when it commenced. Especially those that commenced when the cover was both guaranteed and covered non-cancer unfunded meds taken before November 2003.
On 22 February 2024 at 11:29 pm Anonymous1234 said:
Just to clarify, do NIB expect health insurance clients to advise them if they take up smoking? I’m on an original OnePath policy which was taken over by NIB but the policy wording never changed, there appears to be no expectation that I tell them.
On 27 February 2024 at 8:13 am JPHale said:
A1234 presently no, they are not requiring notice of taking up smoking.

The old OnePath policy is different to the old Tower and nib policy wordings. This smoking issue wasn't in the old OnePath wordings.

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
  • CPI, it's simple, right?
    “Great topic JP. Indexing is a vital issue (especially of monthly disability claims) and one I find often given scant attention...”
    4 hours ago by Steve Wright
  • Advisers frustrated with NZCFS L5 marking
    “It's the remarking that I am finding frustrating. Why does it have to take another two weeks to get it remarked if you have...”
    1 day ago by SharnS
  • Advisers’ role clarified by select committee
    “A good part of this appears to lack the distinction between life and general insurance and the quite different operating...”
    3 days ago by JPHale
  • Advisers frustrated with NZCFS L5 marking
    “@Aggressively_passive I think you might be falling into the trap of not knowing what you don’t know. And yes, there is...”
    4 days ago by John Milner
  • Advisers frustrated with NZCFS L5 marking
    “THAT's what they're frustrated with? Taking a few weeks to get your marks? WTF I'm frustrated that the material was...”
    6 days ago by Aggressively_passive
Subscribe Now

Mortgage Rates Newsletter

Daily Weekly

Previous News

MORE NEWS»

Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build 5.94 - - -
AIA - Go Home Loans 8.49 ▼6.19 ▼5.69 ▼5.69
ANZ ▼7.89 ▼6.59 6.29 6.29
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - ▼5.99 5.69 5.69
ASB Bank ▼7.89 ▼6.19 ▼5.69 ▼5.69
ASB Better Homes Top Up - - - 1.00
Avanti Finance 8.90 - - -
Basecorp Finance 9.60 - - -
BNZ - Classic - ▼5.99 ▼5.69 ▼5.69
Lender Flt 1yr 2yr 3yr
BNZ - Mortgage One ▼7.94 - - -
BNZ - Rapid Repay ▼7.94 - - -
BNZ - Std ▼7.94 ▼5.99 ▼5.69 ▼5.69
BNZ - TotalMoney ▼7.94 - - -
CFML 321 Loans 6.70 - - -
CFML Home Loans 6.95 - - -
CFML Prime Loans 8.75 - - -
CFML Standard Loans 9.70 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 5.99 - -
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Owner Occ ▼7.65 6.19 5.75 5.69
Co-operative Bank - Standard ▼7.65 6.69 6.25 6.19
Credit Union Auckland 7.70 - - -
First Credit Union Special - ▼6.40 6.10 -
First Credit Union Standard 8.50 ▼7.00 6.70 -
Heartland Bank - Online ▼7.49 ▼5.99 ▼5.59 ▼5.69
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.00 6.50 -
ICBC 7.49 6.15 5.69 5.69
Kainga Ora 8.39 7.05 6.59 6.49
Kainga Ora - First Home Buyer Special - - - -
Lender Flt 1yr 2yr 3yr
Kiwibank ▼7.75 ▼7.09 ▼6.59 ▼6.49
Kiwibank - Offset 8.25 - - -
Kiwibank Special 7.75 ▼6.19 ▼5.69 ▼5.69
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 8.75 6.69 6.19 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
SBS Bank 8.49 6.95 6.29 6.29
SBS Bank Special - 6.35 5.69 5.69
SBS Construction lending for FHB - - - -
Lender Flt 1yr 2yr 3yr
SBS FirstHome Combo 5.94 5.45 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
TSB Bank ▼8.69 ▼6.79 ▼6.49 ▼6.49
TSB Special ▼7.89 ▼5.99 ▼5.69 ▼5.69
Unity 8.64 6.29 5.79 -
Unity First Home Buyer special - 6.20 - -
Wairarapa Building Society 8.50 6.50 5.89 -
Westpac 8.39 6.89 6.39 6.39
Westpac Choices Everyday 8.49 - - -
Westpac Offset 8.39 - - -
Lender Flt 1yr 2yr 3yr
Westpac Special - 6.29 5.79 5.79
Median 8.29 6.32 5.89 5.69

Last updated: 15 October 2024 9:12am

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox  |  Disclaimer
 
Site by Web Developer and eyelovedesign.com