Did you know that the premium for a smoker’s life is approximately 40-75 per cent higher than the premium for a non-smoker? While the exact difference may vary and would depend upon the age, premium payment term, policy term and plan option opted by the customer, the fact is that due to increased health risks, smokers are statistically more likely to make insurance claims, leading to higher premiums to offset the added risk for the insurance company.
How does the term policy work for smokers?
A term insurance applicant is categorized as a smoker if he/she has consumed tobacco in any form in the last 12 months. “Smoking is known to make someone prone to various ailments and increase the risk of cancer, heart diseases, lung diseases and other chronic illnesses. This makes such individuals to be placed in a high-risk category when seeking life insurance, thus increasing their premium compared to a non-smoker. The premiums for a Term Plan for a smoker could be 40-50% higher compared to someone who doesn’t smoke,” said Srinivasan Parthasarathy, MD & CEO, Go Digit Life Insurance.
Policybazaar has curated the monthly premium for cover of Rs 1 Crore (33 year old, cover till 60)
Don’t lie
When you sign up for a policy, your insurer will ask you if you smoke, and gather detail about your smoking habits. If you have smoked more than four times a week and continued this for six months, you are termed as a smoker. If you’ve stopped using tobacco for at least three to five years, companies typically will charge you the same rate for life and health insurance as they would a non-smoker.
“Considering how this habit can push you to a higher premium bracket, you might be tempted to withhold this information or lie about this. However, be informed that such misrepresentation or lies would be insurance fraud. Do not falsify this information since this might become a major roadblock during the claim settlement process. If the deterioration of your health is found to be associated with your tobacco consumption or smoking, and you haven’t declared this in the proposal form, or in case the insurer gets suspicious about this when you raise a claim, the company will order an investigation into the medical status. You don’t want to have to deal with an ugly legal battle when you’re already stuck in a medical contingency,” according to Future Generali Life Insurance.
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How can an insurer verify if you are a smoker or not?
A medical test is typically conducted by the life insurer before issuing a Term Life plan. Different tests taken as part of the medical check-up help the insurers determine different health ailments one might currently have or could be exposed to.
How long do you need to wait to buy a term insurance if i have quit smoking?
“However, if a person is a smoker while purchasing a policy and quit smoking during the tenure of the policy, the premium for that policyholder will not come down midway,” said Renewbuy’s Chatterjee
What happens if a non-smoker taking term insurance becomes a smoker after a few years?
To ensure complete transparency, it is recommended to inform the insurance company of your changing lifestyle habits. The insurance company may reject your nominee’s claim if any discrepancies are found later. Therefore, it is better to be honest and avoid any inconvenience for your family in your absence.
Do I need to pay a higher premium if I start smoking after buying a term policy?
“One good way to save on premiums is to start early. Starting early not only helps in seeking better terms from the insurer, but one also gets the best rates when one is young and healthy. Maintaining a healthy lifestyle is another good way to get better premium rates for your Term Plan as insurers typically check your medical history before issuing a policy. One can also maximise their tax savings by opting for a Term Plan by claiming deductions of up to Rs 1.5 lakh under Section 80(C) of the Income Tax Act. The proceeds received to the family on the death of the policyholder is also completely exempt from tax,” said Parthasarathy.