Impact of smoking on the insurance premium: smokers pay more. Representative image / Pixabay
Impact of Smoking on Insurance Premium: The habit of smoking not only makes you sick slowly but also financially weak over a period of time. When it comes to managing personal finances, smokers face a double whammy. First, they blow their hard-earned money, which could be invested, in the smoke. Second, they also have to pay a penalty in terms of higher premiums when purchasing insurance products like term coverage.
Ankit Agrawal, co-founder and CEO, InsuranceDekho, says it’s a well-known fact that smoking is harmful to health and that people who smoke have a higher death rate. So when a person with a smoking / nicotine habit takes out a term insurance plan, they end up paying a higher premium.
“In addition, people with a history of smoking may also need to undergo a medical examination in case they opt for a sum insured above a certain limit. People with a smoking / nicotine habit end up paying a 50% higher premium, ”Agrawal told FE Online.
How smokers pay 50% more on term insurance premium
The following table explains how life insurance premiums vary for smokers and non-smokers.
Life insurance rates for smokers and non-smokers (male 30, earning 10L and over, seeking life coverage of 1 crore)
Obligation to disclose your smoking habit when taking out term insurance
According to Agrawal, it is mandatory to reveal smoking habits when purchasing term insurance because smoking is a major clause in the life insurance agreement.
“When applying for a life insurance policy, a client is asked about their smoking habits and usage over the past 12 months. In some cases, clients are also asked to provide a medical report and therefore it is impossible to hide all traces of nicotine in the medical test, even if the client is an occasional smoker, ”he said.
Insurers do not distinguish between cigarettes and electronic cigarettes
“It is also important to note that although electronic cigarettes (vaping) are considered a healthier alternative to cigarettes, insurers do not distinguish between the two at this time. So whether it is the use of electronic cigarettes or tobacco in any form, a customer qualifies as a smoker if they use it, ”Aggrawal said.
What will happen if a person hides their smoking habit when purchasing a term insurance plan?
According to the co-founder and CEO of InsuranceDekho, it is best to provide correct and true information to the insurer when applying for insurance, as falsifying important information can become a major obstacle when settling claims. In addition, the false declaration or withholding of important information constitutes insurance fraud and if there is any suspicion, the insurer can initiate an investigation against the client.
Do you know what it is? FE Knowledge Desk explains each of these and in more detail at Financial Express Explained. Also get live BSE / NSE stock quotes, latest mutual fund net asset value, top equity funds, top winners, top losers on Financial Express. Don’t forget to try our free income tax calculator.
Financial Express is now on Telegram. Click here to join our channel and stay up to date with the latest news and updates from Biz.
–
