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Is your Life Insurance Premium Affected by Smoking?

Smoking is harmful for health. While smokers ignore such warnings, insurance companies do not. Smoking impacts one’s quality of health, life and even can lead to untimely demise. As life insurance is directly linked with mortality, life insurance companies witness a high amount of risk when offering life insurance cover to smokers owing to the applicant’s increased exposure to health risks. To compensate for their high degree of risk, life insurance companies charge higher life cover premiums from smokers.

Listed below are some questions along with answers, which all smokers should know before availing a life cover:

Who is considered as a smoker according to insurance companies?

Those are categorised as a smoker who has smoked/consumed any form of tobacco product in the past 1 year. Note that, it is not only limited to cigarettes, but it also even includes other nicotine based items like cigars, gutkha, nicotine patch etc.

Remember that your smoking frequency is not factored in by the insurers when calculating your premium. You will be looked upon as a smoker regardless of whether you smoke occasionally or are a constant chain smoker.

How does smoking impact your insurance premium?

When compared with non-smokers, premiums of the life insurance policy can be about 30 to 40 % higher. As smokers suffer from various kinds of serious diseases like heart problems, cancer and bronchitis, which may lead to death, insurance companies charge higher premiums to compensate for the high insurance risk.

Here is an example of term plans for a 26-year-old salaried individual earning Rs 7 lakh per annum who is being offered Rs 1 crore cover for 34 years policy term.

Non Smokers – Monthly premium

ICICI Prudential HDFC Life Max Life PNB Met Life Bajaj Allianz
Rs 819 Rs 837 Rs 686 Rs 700 Rs 699

Smokers – Monthly premium

ICICI Prudential HDFC Life Max Life PNB Met Life Bajaj Allianz
Rs 1,221 Rs 1,264 Rs 1,097 Rs 941 Rs 948

 

Difference in monthly premium payable on term insurance:

ICICI Prudential HDFC Life Max Life PNB Met Life Bajaj Allianz
Rs 402 Rs 427 Rs 411 Rs 241 Rs 249

(Note that the above-mentioned example is just to provide you with an idea regarding the cost difference in case you are a smoker. The above insurance premium while is as per the current offering, may vary from time to time.) 

What if the insured does not reveal his smoking habits to the insurer? 

As from the above instance, it is clear that smokers are charged higher premiums as compared to the non-smokers, it might tempt few insureds to not reveal they are a smoker to avail low premium on life insurance. However, note that insurance companies before approving your insurance request do their own bit of research/investigation to know the applicant’s medical background, which can reveal the potential applicant’s tobacco usage. In case in their medical check, you are confirmed as a non-smoker and subsequently face a critical disease like cancer in future due to smoking, your policy may be terminated. Individuals may even be charged with fraud in such cases.

Will your premium decrease in case you quit smoking after purchasing term insurance?

Yes, your life insurance premiums may be lowered by the insurer if you quit smoking even after buying life insurance. While every insurance company comes with their own set of rules in this regard, generally an insured must stay away from tobacco usage for at least 2 years to be addressed as a non-smoker by most insurers.

How can smokers before availing term insurance check their premium?

Smokers as well as non-smokers both can check their term insurance premium through life insurance premium calculator available online. Typically, the calculator contains fields like plan name, applicant age, sum assured, tenure, premium frequency and riders, if any. On filling up the entire detail, estimated premium figures will be shown as a result.

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