How to buy a term insurance policy despite being a smoker

Santosh Agarwal 

As per a recent World Health Organization (WHO) report, there are approximately 120 million smokers in India – that is 12 per cent of the world’s total smoking population. The report further stated that each year, over a million people die in India due to consumption of tobacco. Of the total Indian smoking population, 70 per cent of the adult males in India smoke while the number of adult female smokers is 13-15 per cent. According to the Indian Heart Association (IHA), due to such a high population of tobacco consumers in India, the country accounts for 83 per cent of the world's heart disease burden, despite having less than 20 per cent of the world's total population.

Smoking and life insurance premiums

Smoking not only affect your health, but also impacts the premium of your life insurance policy considerably. As per several life insurers’ underwriting rules, the policy premium of a customer’s life cover is affected more by smoking habits than the job profile. The life insurance premium for people with low-risk job profiles – software engineers, bankers and marketing consultants – is lower than that for professionals with high-risk job profiles that include construction workers and prison officers. Just like job profiles, life insurance companies split consumers into two different segments: smokers and non-smokers. Considering the underwriting rules and risk-profiles, a smoker with even a relatively low risk job profile will still pay more premium than a non-smoker in a high-risk job.

A prominent reason why smoking has a much greater impact on the life insurance premium than a high-risk profile job is the proven detrimental effect of smoking on the health of the people. Smoking has been the primary reason for a plethora of life-threatening diseases such as lung cancer, strokes, heart ailments and tuberculosis for many decades. It’s like people with high fatality rates need to pay higher life insurance premium. People who smoke, on an average, pay 50 per cent more premium for their life insurance policies in comparison to non-smokers. On an average, the monthly life insurance premium of a smoker is approximately Rs 650 to Rs 850 more than that for a non-smoker.

Premium Calculation for smokers

To evaluate the life insurance premium of smokers, the insurers inquire about the frequency of your tobacco usage in the last one month. This includes use of any tobacco-based products, including cigars, cigarettes or even chewing tobacco. On the basis of the information provided, the insurer decides if the policy seeker is a seasoned or an occasional smoker. Upon considering other under writing rules, the insurer decides to load (increase in premium) the the life insurance policy premium. If you are a smoker and wish to buy a life insurance policy, you must rightly disclose the same to the insurer without the fear of having to pay higher premiums. Often, insurers ask policy seekers to go for a medical test before issuing a life insurance policy. While it may be possible to lie verbally to the insurer, it is practically impossible to cover up traces of nicotine in the medical test even if you are an occasional smoker.

Secure your life at affordable premiums

Though smoking is not a good habit, it has become an important part of many people’s lives. And one of the most convenient and authentic ways to financially protect the future of your loved ones in your absence is by investing in a term life insurance policy. However, several times, it has been observed that smokers avoid taking a term life insurance sighting high premiums as the reason for denial. Fortunately, in order to cater to the problem of denial of life insurance premium for smokers, prominent life insurance companies do offer term insurance plans with adequate sum assured, at affordable prices.

(The writer is Chief Business Officer, Life Insurance, Policybazaar.com)