How Smoking Affects Life Insurance Premium

Smoking is not a habit, it’s a shortcut to a painful death. Every cigarette you smoke reduces 11 minutes of your life. So even if you have started smoking 1 year ago and you smoke 5 cigarettes a day, you already have reduced almost 14 days of your life. A cigarette contains more than 4,000 dangerous chemicals, and 43 of them are cancer causing agents. It causes cancer of stomach, throat, mouth, lungs, nasal cavity and much more. Imagine how much you can lose due to smoking. In India only, 8 to 9 lakh people die every year due to smoking and 1 out of 5 deaths is because of tobacco use.

The ill effects of smoking are not only limited to your body, but while buying a life insurance policy, it affects your rate of premium also. The insurance company charges a higher premium from smokers than non-smokers. The difference between the premium rate for smokers and non-smokers varies from company to company. Many people who smoke or take tobacco in any form find it difficult to relate the effects of being a smoker with life insurance policies.

So, through this article, we will try to answer some of the basic queries regarding Life Insurance Policy and smoking.

Who is a Smoker According to Insurance Companies?

Use of tobacco/nicotine in any form defines you as a smoker. It doesn’t matter whether you are a regular user of tobacco/nicotine or not,  even occasional users are also considered as a smoker. If you use tobacco/nicotine in the form of cigarette (even e-cigarette), beedi, pan, gutka, hookah, patch, chewing gum, khaini, etc., you will be considered as a smoker. Even if you have smoked only one cigarette, six months ago, you will be regarded as a smoker.

While taking the policy, some questions are asked to categorise you as a smoker or a non-smoker. Questions can be like, have you ever consumed tobacco?, have you consumed tobacco/nicotine in past 1 year. Based on the answers given by the person, insurance company defines you as a smoker or a non-smoker.

Why am I being Charged Extra for Smoking?

The premium rates depend on upon the risk involved in the life of the applicant. There are many risks indicating factors of life which company considers while deciding upon premium rates, like your age, health condition, family history, place of residence, etc. The higher the risk of life, higher will be the rate of premium. So, Insurance companies assess the risk in your life through screening the proposal form and other reports.  Smoking cigarette is one of them. Smokers have a high rate of mortality than a non-smoker and that’s why companies charge more for smokers. As premium rates depend on upon the risk and smokers, have a high risk in their life due to being exposed to various critical illnesses and affecting the life expectancy rate of the person who smokes or consumes tobacco in any form.

How much Extra I have to Pay due to Smoking?

The insurance company charges a high rate of premium for smokers in comparison to non-smokers. The premium rates can be near to double the rate of a regular premium. The difference in rates of premium for smokers and non smokers varies from company to company.

For example, a person at the age of 26 years, buying a term insurance plan for 30 years with a coverage of 1 crore will have to pay an annual premium of Rs. 7,222, if he is a non smoker. While the same person going for the same term policy will have to pay a premium of Rs.10, 804, if he is a smoker.

What if I don’t Reveal About My Smoking Habit?

Many people think that by lying about their smoking habit, they will be able to save the extra premium charged to smokers, but that doesn’t happen. Any misleading information provided by the insured person while taking the insurance is considered as fraud. At the time of claim, if the company finds the reason behind death is smoking, they will cancel your claim immediately. The main objective of taking a life insurance policy is not lower premiums, but as a protection against life and that can be done if your claim settlement is successful. And if there is a requirement of medical check-up before insurance, your disclosure about smoking will not even matter because the medical test will reveal your smoking history.

It is always better to stay away from life-threatening addictions like smoking. It keeps you pushing closer towards your grave, and that’s why insurance companies charge extra from smokers. If you smoke, don’t lie about your habit and try to find the best life insurance policy by understanding its terms and conditions for smokers.

Harjot Singh Narula

Harjot Narula is founder and CEO of ComparePolicy.com, an IRDAI approved insurance web aggregator focussed on selling online insurance for companies. Harjot has more than a decade of experience in software development and has also spent 5 years in US working for the mortgage and risk management industry.

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