Impact of Smoking on Your Term Insurance Premium

Numerous factors influence your term insurance premium, such as your health, age, and lifestyle. Insurance companies often charge a higher premium when there is an increased risk of potential claims due to the lifestyle choices of the insured.

Term insurance is a cost-effective and simple tool for protecting your family’s future. However, certain lifestyle choices (such as smoking in this case) can not only increase your net premium; any non-disclosures or providing incorrect information to the insurance company can result in claims rejection. Hence, smoking not only affects your health and well-being, but it can also have a poor effect on your financial planning.

Let us understand how much smoking can affect your term insurance premium and overall financial plans.

What are the factors affecting term insurance premiums?

Your term insurance premiums depend on many factors, such as age, overall health, occupation, and lifestyle habits. There has been endless research where the correlation between smoking and cancer (and other critical illnesses) has been reaffirmed. Due to such factors, smoking is considered a critical threat to the well-being of an individual. Therefore, the insurance company needs to assume a higher degree of risk to offer term insurance to smokers.

How does smoking affect term insurance premiums?

Here are the different ways in which smoking affects term insurance premiums:

1. Categorization of Smokers: Before you opt for a term life insurance, one of the first questions asked is related to your smoking habits. Just like all other material information, it is critical to provide facts to the potential insurer. A smoker is generally anyone who consumes tobacco products, including cigarettes, cigars, chewing tobacco, or nicotine patches, within a specified period before applying for the policy. Some insurers consider occasional tobacco users as regular smokers, whereas the criteria might differ based on the insurance company.

2. Increased Health Risk for Smokers: As explained before, smoking is scientifically linked with a large number of diseases and illnesses, such as cardiovascular diseases, lung cancer, and respiratory disorders, all of which significantly reduce life expectancy. Talking purely from the perspective of the insurance company, this habit increases the likelihood of death or critical illness, thereby posing a serious risk of payment for the insurance company. Hence, the insurance company must mitigate such risk by charging a higher term insurance premium.

3. Significantly Higher Premium: Anyone categorized as a regular smoker might have to pay a substantially higher premium of 35-55% more than the regular premiums.

What if you start smoking after buying a policy?

If you undergo a lifestyle change after buying a policy, we advise you to disclose the development to the insurance company. You can simply inform your agent or contact customer support to update the information. Typically, all insurance policies have a clause that requires a policyholder to provide details of any such lifestyle change. It is critical to inform the insurer so that the policy remains active and avoids any hassles during the claim.

What is the impact of non-disclosure?

Even if you are a regular or occasional smoker or start smoking after buying the policy, it is critical to inform the insurance company about all such developments. Failure to notify the insurer of smoking can have serious consequences. Non-disclosure may lead to claim rejection, policy cancellation, or even allegations of fraud, especially if it is discovered that your smoking habits contributed to the insured event.

This can mean that all your premiums (and efforts) to protect your family can go in vain. Hence, we highly recommend disclosing all the material information to the insurer.

How can you manage high premiums?

Since we only wish you the best of health, the first suggestion would be to undergo a lifestyle change. By giving up smoking and other tobacco-related products, you reduce your risk of life-threatening diseases, which may lead insurers to re-evaluate your premium rates after a specific period of abstinence. You can take the help of support programs, replacement therapies, and mobile apps to give up tobacco completely.

Further, we advise you to choose the right insurer that offers competitive rates for smokers. Some policies also have incentives that offer lowered premiums and higher coverage in case you reduce tobacco usage or completely give it up. It is also critical to have regular health checkups.

Summing up

Smoking is a health hazard and can have serious long-term impacts on your cardiovascular and general well-being. Besides being a threat to your long life, smoking can automatically increase your term insurance premiums and, in some cases, reduce the overall coverage. We suggest you try measures to quit smoking or tobacco use completely (or bring down the usage massively). In all circumstances, informing your insurance company about all such developments is important.

Ultimately, making informed choices and maintaining transparency with your insurer ensures robust financial protection for your loved ones and peace of mind for you.

FAQs

Does smoking affect my term insurance premium?

Yes, smoking increases your term insurance premium by 35-55% as insurers consider it a high-risk habit due to its impact on health.

What happens if I hide my smoking habit from the insurer?

Non-disclosure of smoking can lead to claim rejection, policy cancellation, or fraud allegations, nullifying your insurance benefits.

Can I lower my term insurance premium after quitting smoking?

Yes, insurers may re-evaluate your premium rates after a specific period of abstinence, provided you undergo medical evaluations and disclose the lifestyle change.

Are occasional smokers categorized as smokers for insurance purposes?

Yes, many insurers classify occasional smokers as regular smokers, but the criteria may vary among insurance companies.