Zurich lowers dread disease premiums for long-term non-smokers. This group has its own tariff for the first time. DAS INVESTMENT expert Frederik Borchardt has calculated that the premium savings still cannot keep up with the existing price differences of competing providers.
Frederik Borchardt: He is the expert in Dread Disease and basic disability insurance at DAS INVESTMENT. | Photo: Borchardt insurance broker / Nadine Rehmann with Canva | Photo: private
Zurich’s Irish subsidiary, Zurich Life Assurance plc, recently announced the introduction of a new non-smoking tariff on the German market for serious illness prevention. The dread disease policy, which is offered in two tariff variants, is called “Eagle Star illness protection letter” and “Extended Eagle Star illness protection letter” at Zurich. According to the product provider, the idea behind this is to take into account a positive change in smoking behavior in society and a healthier lifestyle.
`,
width: 970,
height: 250,
callback: () =>
adProcessor.makeResponsive(holderId);
$(‘#’ + wrapperId).addClass(‘billboard_article_wrapper–loaded’);
window.billboardGrowFx.init(wrapperId);
// colorize when in takeover mode
window.waitTakeoverMajor.then(isTakeoverOn =>
if (isTakeoverOn)
const filter = window.takeoverHandler.demoFilter;
$(‘#’ + holderId).css(‘filter’, filter);
);
});
});
}
}, 1000); // timeout is for paid articles to start after content unlocking
} else
let adId;
if (window.innerWidth
$(‘#’ + wrapperId).addClass(‘billboard_article_wrapper–loaded’);
window.waitDcNonCritical.then(() =>
window.billboardGrowFx.init(wrapperId);
);
,
onNoBanner: () =>
devlog(‘NO BANNER FOR BILLBOARD INSIDE CONTENT (‘ + adId + ‘)’, ‘ads’);
;
}
Differentiated non-smoking tariffs for the first time
Until now, Zurich’s product portfolio had the classic division into smokers and non-smokers. A non-smoker was defined as someone who had not smoked for at least twelve months. A new tariff has now been added for non-smokers, for people who have been smoke-free for at least ten years. Zurich defines smoking behavior as follows: “We understand smoking and/or nicotine consumption, even if only occasionally”:
a) Smoking cigarette, cigarillo, cigar, pipe, tobacco, shisha or water pipe
b) Consumption of e-cigarettes, e-pipes, e-cigars, snuff, chewing tobacco, nicotine replacement products such as nicotine patches or chewing gum.
Not reporting smoking behavior is already standard practice
The promise is that the new non-smoking tariff is a novelty on the German market in this area in terms of cost savings. Risk factors such as higher-risk jobs, body mass index and risky hobbies such as motorcycling in traffic do not lead to automatic surcharges in the premium calculation. In addition, a change in smoking behavior during the term of the contract does not have to be reported.
This waiver of the obligation to report is already being met by a large number of competitors. The comparison software I use shows that around 70 percent of the tariffs considered do not have this. An explicit mention in the insurance conditions that the policyholder does not have to report changes in smoking behavior would have been desirable. In Canada Life’s General Terms and Conditions, for example, there is an explicit note under the heading “Do you have to inform us of a subsequent increase in risk?” Such a reference is missing at Zurich.
Sample calculation from Zurich
What is particularly interesting is what specific premium savings are associated with the new tariff “Non-smoker for at least ten years” and how other market participants feel about smokers and non-smokers. Remarkably, Zurich cites an example from term life insurance in its press release. A 35-year-old non-smoker has so far paid EUR 20.94 for EUR 200,000 in death protection over a 30-year term. In the future, the contribution will be 19.68 euros, according to the example calculation.
Dread disease insurance is always linked to a death benefit. While the amount of this can be freely agreed with the “Extended Illness Protection Letter”, the death benefit amount for the “Illness Protection Letter” is only 5,000 euros. Statements about the contribution savings for the new non-smoking tariff with regard to the benefit in the event of serious illness would therefore have been more interesting.
Sample calculation from the expert
My own calculations result from these requirements: 35 years old, 200,000 euros insured sum when a serious illness occurs, 5,000 euros death benefit, 30-year term starting on January 1, 2024, an annual contribution of around 160 euros for smokers, around 110 euros for non-smokers (at least twelve months) and around 95 euros for non-smokers (at least ten years), i.e. for the new one Zurich tariff. This means that those insured with this tariff save 40 percent in premiums compared to smokers, and 13 percent compared to non-smokers who have not smoked for just a year.
My rough analysis of market participants, in which I looked at the largest dread disease providers, shows that Zurich is currently the only company with one smoking and two non-smoking tariffs. Other providers forgo further product differentiation for non-smokers. In this respect, there is actually a market innovation here. The additional premium reduction naturally makes the Zurich offer more competitive for a specific target group.
Even greater price differentiation from the competition
However, other providers, even without premium differentiation in the non-smoking insured group, offer percentage premium advantages with the same parameters in the sample calculation, some of which are higher. Long-term non-smokers are actually better off than just within Zurich.
At Canada Life, the premium advantage for all non-smokers is 47 percent. The situation is similar with “ErnstfallSchutz”, the Nuremberg Dread Disease tariff. The cost savings compared to smokers are 44 percent, regardless of whether they have not smoked for a year or for ten years. Of course, these values only refer to the calculation example mentioned.
Ideal Insurance shows that things can be completely different with its “Total Protect” tariff. The group of smokers is divided into heavy smokers (more than 20 cigarettes per day) and smokers (up to 20 cigarettes per day). Heavy smokers pay twice as much as non-smokers.
About the author:
Frederik Borchardt is an insurance broker specializing in employment insurance, health insurance and risk life. He is the designated successor to Eckhard Borchardt as owner of the company Borchardt insurance broker. In addition to his many years of work in his father’s company, he has been running his own brokerage agency in Frankfurt am Main since 2022.
2023-12-24 21:50:49
#Zurichs #nonsmoking #tariff #INVESTMENT
