Money
What smokers should know about life insurance
Summary
- According to the underwriting rules of several life insurers, life insurance policy premium is influenced more by smoking habits of the policy buyer than any other factor in general
The price of life insurance is dependent on multiple factors and one of these is the habit of smoking/consumption of tobacco. So, if you are a smoker and thinking of buying a life insurance policy, here is what you should know.
For decades, smoking has been the leading cause of various life-threatening diseases such as lung cancer, stroke, heart disease, and tuberculosis. It’s no wonder then that the habit is also considered hazardous for your life insurance premium. According to the underwriting rules of several life insurers, life insurance policy premium is influenced more by smoking habits of the policy buyer than any other factor in general.
Sajja Praveen Chowdary, business head, Term Life Insurance, Policybazaar.com, said, “The proven adverse effect of smoking on people’s health is one of the main reasons why smoking has a significantly larger impact on life insurance premiums. In comparison to non-smokers, smokers pay around 50% higher premiums for their life insurance policy. For instance, for a 30-year old non-smoker earning between ₹10 and 15 lakh, the annual premium for a ₹1 crore life cover would be ₹12,173. Whereas the annual premium for a smoker would be 54% more than a non-smoker, i.e., ₹18,718."
What you should do
Don’t hide your smoking habit. When you apply for life insurance, the insurer will ask you if you have used tobacco products in the last 12 months. While some attempt to lie about it, insurers find it out through medical or nicotine tests, which detect nicotine in your blood or urine samples. And if this is found out later, the policy may be revoked by the insurer. or the claim can be rejected on the basis of non-disclosure of facts.
A life insurance contract is one that is executed in good faith, and the claims will be payable only when you keep good faith while purchasing a life insurance policy.
Insurers undertake rigorous fact checks prior to the approval of policy issuance or claims; hence, non-disclosure of critical facts may hamper due process.
Samit Upadhyay, chief financial officer, Tata AIA Life Insurance, said, “Life insurers seek details of lifestyle habits and health to understand consumer needs better as this plays a critical role in accepting policy applications. Thus, you must disclose your smoking habits at the time of policy application to ensure transparency of facts. While this may lead to paying an extra premium, non-disclosure of tobacco consumption may lead to death claim rejection if the cause of death has direct relevance to the non-disclosure of tobacco consumption."
It will also help if you try to quit smoking for your good health. This way, your life insurance premiums will become affordable too. “To qualify for non-smoker insurance premiums from most insurers, you must quit smoking for at least 12 months," said Chowdary.
