A life insurance policy is essential for anyone who has dependents. Life insurance companies are open to providing coverage for almost anyone as long as the premiums are paid regularly. However, there are certain requirements that must be satisfied by policyholders before they sign up for a life insurance cover. People who don’t have drinking or smoking habits have no problems when it comes to signing up for an insurance policy. Most companies do not require medical examinations till a certain age. However, smokers are required to declare their habits while signing up for the policy. The cost of life insurance coverage is dependent on this declaration.
Whether it is a health insurance cover or a life insurance cover, it is essential for an individual to declare his/her smoking habits to the company. This is certainly advisable in order to avoid future problems in claims. For instance, a smoker may sign up for a life insurance cover by declaring himself as a non-smoker. However, if the death of the policyholder is directly or indirectly related to smoking, the company has the right to deny the payment of claims to his/her dependents.
In the above-mentioned scenario, the future financial security of the insured’s dependents may get threatened by concealing the smoking habit. A claim denied after a person’s death may have serious implications on the family’s financial security. People who wish to avoid this must declare their habits beforehand without fail. In most cases, the premium charges will almost double for smokers. Only in some extreme cases with severe pre-existing conditions, an application will be rejected by the company.
Most people are of the opinion that the terms and conditions will be different for occasional smokers and frequent smokers. However, a life insurance company will not differentiate between these two categories. Even if you are an occasional smoker, an insurance company will impose additional charges applicable to a smoker. In addition to cigarettes, usage of other nicotine products such as chewing tobacco, pan masala, gutka, nicotine patch, marijuana, cigars, etc., will also classify a person as a tobacco user. People using any of these products will have to pay additional charges for their life insurance policies.
There are multiple reasons as to why life insurance premiums are drastically higher for smokers. It is a known fact that smokers are prone to various health risks including cardiac problems and respiratory issues. Most importantly, the risk of cancer is drastically higher among smokers and the risk of premature death is very high among cancer patients. In case of the death of the insured during the policy term, the insurance company has to pay the coverage amount to the his/her dependents. Hence, the overall cost of providing coverage to smokers is significantly higher for an insurance company. This, in turn, results in higher premiums for policyholders.
If you are a former smoker, it must be declared to the insurance company at the time of buying a policy. The company will consider various factors before providing a specific quote to you. The duration of your smoking habit will have an impact on the price offered for you. Also, the time that has passed since you have quit smoking will be considered when calculating the new premium charges for you. So, the longer you wait, the higher the chances of getting a better deal. Most companies expect former smokers to have dropped the habit for at least 6 months. Great deals at non-smoker prices are available for people who have quit smoking for at least 12 months.
There might be occasions when smokers may kick the habit during the course of a policy term. They may have taken up the policy at the price applicable for smokers. Now that they have quit smoking, they can ask the company to reconsider the premium at the time of renewing the policy. Insurance companies have different rules when it comes to recalculating premium charges based on smoking habits. However, most insurers will certainly reconsider this request. The updated premium calculation will be done based on the time that has elapsed since the policyholder last smoked.
I am a 30-year old salaried professional earning Rs.5 lakh per year. I am currently exploring the term insurance options for a chain smoker like me. Do I have to pay more premium because of my smoking habit? Is it ok if I hide this from the insurance company? Also, what are the best plans suitable for someone like me?
The premium charged for life insurance is influenced by various factors like age, location, sum assured amount chosen, smoking habits, tenure, etc. Since the risk-factor of premature death is extremely high among smokers, smokers have to pay more premium when they buy a life insurance policy. The actual premium may vary from one company to another. However, all insurers in the market take this into consideration when calculating the premium amount for a policy.
It is not a good idea for you to hide your smoking habit from your insurer. Even though you can save money on premium, it will create problems in the future at the time of claim settlement. If the company later finds out about the smoking habit, the family of the insured will not get any compensation during the time of a claim. This also amounts to insurance fraud, and the company has the right to initiate legal action against the insured. So, it is always a good idea to disclose your actual smoking habits to the insurer and pay higher premiums if necessary.
Some of the best plans suitable for you are listed as follows. The premium for smokers and non-smokers are listed here as well. This will help you find out how much extra you have to pay because of your smoking habit.
The plans listed here have a sum assured amount of Rs.50 lakh with policy term 20 years. The applicant is a male smoker.
|Plan name||Premium for smokers||Premium for non smokers|
|LIC’s e-term plan||Rs.7,545 per year||Rs.5,428 per year|
|ICICI Prudential iProtect Smart - Life Plus||Rs.9,773 per year||Rs.7,534 per year|
|Max Life Online Term Plan Plus||Rs.10,679 per year||Rs.7,788 per year|
|Aegon Life iTerm (basic cover)||Rs.5,848 per year||Rs.3,608 per year|
|HDFC Life 3D Plus - Life Option||Rs.6,956 per year||Rs.4,720 per year|
The benefits available with these plans may vary from one another. However, as you can see here the premium amount is considerably different for smokers and non-smokers. In a similar way, the premium for term covers will differ a lot based on your entry age. Hence, it is a good idea to enter term policies as early as possible.
To sum everything up, the cost of life insurance is directly proportional to the smoking habits of the insured person. This type of premium calculation applies to all types of insurance policies including term plans, ULIPs, endowment policies, etc. The most important thing to note here is that lying about a smoking habit constitutes fraud. Most companies in the market have their agents investigate a claim before providing the settlement amount. If the smoking habits of the insured are found during this investigation, the claim will get rejected and the financial security of the insured’s dependents will be in jeopardy. The key takeaway from here must be that smoking habits must be declared beforehand even if it means paying higher premiums for life insurance coverage.
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