Smoking is injurious to health; this is common knowledge. But do you know that it is disastrous even for your wallet? The advice holds true especially when planning financial stability for yourself and for your loved ones.
Insurance companies view smokers as high-risk customers. Quite naturally, a smoker will pay a high premium to avail such a protection.
Let us take you to everything you should know as a smoker, and wanting to take a life insurance policy for yourself:
The impact of smoking on your life insurance premium
Life insurance lets you ensure financial stability for your loved ones in your absence. This comes up with the question; how do insurance providers determine your premium? The answer depends on your health and financial well-being and dependents. And the most significant among their considerations is whether you are a smoker or not. All life insurance providers add this up to their premiums in the policies designed for smokers. It happens because of the health risks associated with the smoking habit and in other scenarios, the family history and hereditary factors.
Smoking damages your heart, restricts your blood vessels and causes trouble to your lungs. It may appear natural as you age. But the risk is higher for smokers.
The underwriting process
When you apply for a life insurance, the underwriter evaluates certain conditions and scenarios, under pre-decided guidelines mentioned by the insurers. It is done to assess your health conditions and hereditary factors and ailments that will decide your insurance premium. The evaluation is reflected in your premium rate and determines the premium rate. Some may lie about smoking. But a medical test will expose the real conditions and will reveal the information even if you smoke occasionally. Make sure that you remain honest if you smoke. Smoking, for life insurance providers, is a serious concern. And they are quite stringent in this regard. The situation remains the same, even for vaping and e-cigarettes.
The fundamental difference in premium
Talking in general*, if a non-smoker applies for life insurance coverage up to INR100,00,000 for 32 years with a particular company, his annual premium is up to INR 8500**. At the same time, if a smoker applies for it with the same provider, his yearly premium will be approx INR 10,000**. The big difference happens because of one single bad habit; smoking. The increase in premium may vary based on the severity of the habit and the damages it may have caused.
Insurance for smokers is expensive, even if you quit smoking. This happens due to the harm your habit has done to your body. Know that quitting smoking just before taking a policy won’t help you. No insurance company will treat you as a non-smoker if you quit it the previous day. Even passive smoking will have a say in this regard.
If you have quit using tobacco, you may contact your life insurance provider. The company may have discounts to encourage the trend. But be prepared for unpleasant surprises.
The cost of dishonesty
As mentioned above, you may be able to hide your habit from your life insurance provider. You may even manage to get a policy with a lower premium. Know that such a victory is short-lived. If found out, the agency may charge you with fraud. Your company may even declare the entire policy invalid for the same reason.
Remain honest and transparent. The traits may cost you a bit but will protect you from mishaps.
The estimates say that it can take 8 to 30 tries to kick the habit for good. It is easier said than done. But we strongly recommend all the smokers to kick the habit and quit smoking. And those if who have tried to quit in the past and haven’t succeeded, keep trying.
*It is just an example to explain the difference that occurs in life insurance premium rates of a smoker and non-smoker at an age of 21.
**The premium may vary from insurer to insurer.