Quit smoking and your insurance premium gets 75% cheaper

Smoking kills! And it makes your insurance premium skyrocket. For smokers, the premium becomes anywhere between 40%-75% higher than the premium for a non-smoker.

Even though several other factors like age, premium payment term, policy term and plan option impact the cost, smokers are statistically most likely to make insurance claims due to increased health risks. This leads to higher premiums to offset the added risk for the insurance company.

Also Read: India's health insurance: 68% under-insured with coverage below ₹10 lakh

"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," Srinivasan Parthasarathy, MD & CEO, Go Digit Life Insurance told Business Standard.

Smokers vs Non-Smokers

A term insuarance policy categorises an applicant as a smoker if he/she has consumed tobacco in any form in the last 12 months. When you sign up for a policy, your insurer gather details about your smoking habits. If you have smoked more than four times a week and continued this for six months, you will be 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.

However for smokers, an insurance company would charge more for the premium as they are more likely to file for a claim on an insurance policy due to premature death or suffering from a critical illness in the later stages of life. 

Verification

An insurer can verify if you have revealed only the truth. Usually before issuing a term life plan, the insurance company would conduct a medical test. The companies are also authorised to investigate a person's smoking habits. Smokers usually have traces of nicotine in the urine and blood. Thus, these medical tests can reveal a person’s smoking habits.

Smoking impacts Term Insurance Premium

Here are the different scenerios and the impact

• If you quit smoking you can choose the term policy that is suitable to you because every insurance company has different waiting period. Certain insurers may consider you a non-smoker if you haven't used any form of tobacco for the past 12 months, while other insurance plans may extend this period to 3 years. This waiting period allows insurance companies to assess your new non-smoking status and potentially offer you more favorable premium rates compared to what a smoker would pay
• If you start smoking after getting a term insurance the cost of the premiums would not change. However, at the claims stage it might become difficult to prove whether the disclosure on non-smoking was made correctly or not. This might lead to rejection of nominee claim.
• If you quit smoking during the tenure, the premium for that policyholder will not come down midway