BackWorld No Tobacco Day 2023: How do smoking habits affect life insurance premiums?
Smokers must shell out more while buying life insurance plans. The risk of suffering from diseases or dying early due to continued tobacco use has prompted life insurance companies to charge higher premiums to smokers.
PremiumFrom the well-articulated theme “Commit to Quit" of “World Tobacco Day" in 2021 to a more apt and practical theme “Grow food, no tobacco", the World Health Organization has set the ball rolling for the world to choose between food and addiction. Beating addiction can be hard, especially, when it caused due to smoking habits.
Apart, the global food crisis has prompted many world leaders to realize how the tobacco industry disrupts any attempts to substitute tobacco plantations, thus, only impeding efforts to grow more food and avail food grains to a major portion of the world’s global population.
More than this, smoking affects health, thus, contributing to major lung disorders and incurable diseases. The caveat “Smoking is injurious to health" printed on cigarette packs is largely ignored and has created hardly any stir among smokers to get rid of their smoking habits. The rise in diseases has prompted many people to buy health insurance and life insurance plans with of course the insurance companies charging higher premiums than non-smokers.
One does not realize how medical inflation has forced many people to destroy their emergency corpus or take loans to just pay off their hospital and treatment bills. With health care becoming a pressing need more than ever before, the realization of the need to buy health and life insurance policies has risen. More people have bought life insurance plans during and after the pandemic than before the epidemic, thus, hinting at the growing consciousness among people to secure the future of their loved ones.
What many people continue to be blissfully unaware of, smoking affects life insurance premiums. The idea behind charging higher premiums from smokers is that these people are more likely to succumb to life-threatening diseases and untimely death. The risk factor for life insurance companies is more as the families of policyholders are more likely to queue up for claim settlement from them.
Life insurers do not charge premiums at random. For the purpose of calculating premiums, life insurance firms assess and evaluate on the basis of certain parameters including age, gender, lifestyle, job profile, and so on. Smoking habits can be a huge impediment to one’s healthy lifestyle, thus, highlighting why smokers are charged higher premiums than non-smokers.
To understand how smoking habits affect life insurance premiums for an insured aged 36 years old and looking to buy a term insurance policy with a coverage amount of Rs 2 crores.
Name of the Life Insurer | Name of the life insurance plan | Monthly premium charges for smokers (in Rs) | Monthly premium charges for non-smokers (in Rs) |
ICICI Prudential Life Insurance | iProtect Smart | 3269 | 2017 |
HDFC Life Insurance | Click 2 Protect Life | 4345 | 2428 |
Max Life Insurance | Smart Secure Plus | 3503 | 2190 |
TATA AIA Life Insurance | Maha Raksha Supreme | 3709 | 2355 |
Bajaj Allianz Life Insurance | Bajaj Allianz Life eTouch | 4387 | 2045 |
| Source: PolicyBazaar | |||
Check out the premium charges, and you will realize how smokers are charged much higher premiums than non-smokers.
Insurance firms ask questions regarding smoking or chewing tobacco habits while filling out the proposal form. In the proposal form, customers are also asked how frequently they smoke or chew tobacco products. Underwriters gauge from the responses the customers’ lifestyle, thus, helping them decide whether to issue the insurance, charge higher premiums, or deny the proposal altogether.
Some people also tend to lie about their smoking habits while buying insurance. This can be a bone of contention while claiming the insurance amount or applying for the life insurance payout.
Also, if the insured withholds information about smoking habits which may be later revealed to the insurance company, the insurance company may regard this as fraud or a scam, and the policy may be deemed void. The end result is that claims submitted to the insurance company will not be accepted in this situation.
As the world observes “World No Tobacco Day" in 2023, each one of us must pledge to disallow all kinds of tobacco usage in life so as to secure both good health and healthy life in the long run.
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