Everyone knows that smoking cigarette is injurious to health and every smoker reads it on a cigarette pack, but there are hardly a few who take the effort to try and quit smoking. It affects your health severely and also hampers your wealth growth. Buying a pack of cigarette may not seem to be a costly thing but over the years the amount becomes quite huge. Moreover, medical inflation is running in double digits and health care is getting more expensive by each passing day.
Smoking is a major cause of many life-threatening diseases like lung & throat cancer, COPD, heart ailments, strokes, peptic ulcer, etc. Getting treatment for such life-threatening diseases could dig a big hole in your pocket.
And it’s not just health or the medical treatment cost, smoking also affects your insurance premium.
Let’s understand Smoking and Life Insurance Premium:
Life Insurance policies provide life cover to the life assured for a specific period against the promise of premium payment. Term insurance policy is pure life risk coverage policy, which is often opted to provide a financial shield to the dependents in case of the life assured’s untimely death.
Due to increasing awareness, the low premium for a high sum assured provided in term plans, and the convenience of buying insurance online, customers are showing a lot of interest. Furthermore, buying insurance online cuts down on many operational and administration costs for insurance companies, which further decreases the insurance premium. All these factors have created a huge demand for term plans.
Life Insurance companies consider the following key parameters such as age, gender, lifestyle, job profile, etc. for the premium calculation. Here, lifestyle includes whether the applicant smokes or not. As smokers are more prone to life-threatening diseases, possibly premature death, or being diagnosed from a critical illness, insurance companies consider that they are more likely to claim insurance. Consequentially, smokers are quoted with high premiums as compared to non-smokers. A recent study has shown that life insurance companies have received claims from the nominee of smokers than non-smokers working in a high-risk job. Smoking has proven to be detrimental to health and longevity than the highest risk job profiles.
Impact of smoking on Term Insurance Policy:
A plain vanila term insurance for 25 years old non-smoker person with a sum assured of Rs.1 crore for a tenure of 40 years would cost anywhere in between Rs. 5,000 to Rs. 9,000 per year.
|Gender (25 years old)||Premium Range|
|Male||Rs. 6,000 – Rs. 9,000|
|Female||Rs. 5,000 – Rs. 8,000|
However, the premium would be higher for a person who smokes or chews tobacco.
|Gender (25 years old)||Premium Range|
|Male||Rs. 9,000 – Rs. 13,000|
|Female||Rs. 7,000 – Rs. 12,000|
While filling up the proposal form, insurance companies will ask you questions about whether or not you smoke/chew tobacco products. And in the proposal form, you are asked about the frequency of usage of tobacco products. This helps underwriters to understand the lifestyle a person lives, according to which they decide to issue the policy, charge more premiums or decline the proposal.
Note: All prices are indicative, may vary from insurer to insurer.
No matter what, don’t withhold or hide information
If an insured holds back information and is revealed to the insurance company later, an insurance company could consider that as a fraud or scam, in which case the policy would be considered as invalid. Thus, in such a case, claims made under the policy won’t be accepted.
Instead, do this: Get a healthier lifestyle, pay a lower life insurance premium.
If a proposer who was a smoker and doesn’t smoke anymore, they can avail non-smoker life insurance quotes from insurance companies. However, there is a criterion that the person who has not used tobacco products in the last 1-3 years and the same is mentioned in the proposal form could avail non-smoker premium. Furthermore, insurers assume that such prospects won’t go back to start using tobacco again.
Or, one can discontinue the active plan and opt for another by declaring as non-smoker only if hasn’t smoked in last 1-3 years (The clause varies from insurer to insurer).
Here’s what smokers can do to get an affordable life insurance premium
- Seek experts’ advice
- Quit smoking
- Look for companies who consider a smoker as a non-smoker who has not used tobacco or any tobacco products in 1-2 years instead of 3 years.
Smoker or non-smoker, having a term plan is a good way to secure your family financially in your absence. Don’t let smoking habit abstain you from buying life insurance.
By: Mr. Rakesh Goyal – Director, Probus Insurance Brokers Pvt. Ltd