Smoking is making you pay 50% more premium on a term insurance plan! Here’s how

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Updated: Apr 05, 2021 4:45 PM

Impact of smoking on insurance premium: The smoking habit not only makes you sick slowly but also financially weak over a period of time. When it comes to managing personal finances, smokers face double whammy.

impact of smoking on insurance premiumImpact of smoking on insurance premium: Smokers pay more. Representative image/Pixabay

Impact of smoking on insurance premium: The smoking habit not only makes you sick slowly but also financially weak over a period of time. When it comes to managing personal finances, smokers face double whammy. First, they blow their hard-earned money, which could be invested, in the smoke. Second, they also have to pay a penalty in terms of higher premiums while buying insurance products like term cover.  

Ankit Agrawal, Co-founder and CEO, InsuranceDekho, says it is a well-known fact that smoking is injurious to health and people who smoke have a higher mortality rate. Thus when anyone with a smoking/nicotine habit buys a term insurance plan, they end up paying a higher premium. 

“Moreover, individuals with a history of a smoking habit may also need to undergo a medical test in case he/she opts for a sum insured above a certain limit. People with smoking/nicotine habit end up paying 50% higher premium,” Agrawal told FE Online. 

How smokers pay 50% more on term insurance premium

The following chart explains how life insurance premium vary for smokers and non-smokers.

Life Insurance Rates for Smokers vs Non-Smokers (30 y/o Male, earning 10L+, looking For 1 Crore Life Coverage)

Compulsory to reveal smoking habit while buying term insurance

According to Agrawal, it is compulsory to reveal smoking habits while buying a term insurance as smoking is a major clause in the life insurance agreement. 

“While applying for a life insurance policy, a customer is enquired about his/her smoking habits and its usage in the last 12 months. In some cases, customers are also asked to provide a medical report and hence it is impossible to hide any traces of nicotine in the medical test even if the customer is an occasional smoker,” he said. 

Insurers make no distinction between cigarettes and e-cigarettes

“It is also important to note that although e-cigarettes (vapings) are considered a healthier alternative to cigarettes, insurers make no distinction between the two as of now. Thus, be it usage of e-cigarettes or tobacco in any form, a customer is qualified as a smoker if he/she consumes any of these,” said Aggrawal. 

What will happen if a person hides his smoking habit while buying a term insurance plan?

According to the InsuranceDekho co-founder and CEO, it is best advisable to furnish correct and true information to the insurer while applying for insurance as falsifying the material information can become a major roadblock during claim settlement. Besides this, misrepresentation or withholding of material information amounts to a fraud in insurance and in case of any suspicion, the insurer may file an investigation against the customer.

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