How Smoking Impacts Your Term Insurance Policy

You might not realize this now but in reality, the costs associated with smoking are much higher than just a cigarette packet. Smoking can hamper your health and financial wellbeing in many ways in the form of medical expenses and higher life insurance premiums. In the case of a term plan, the premium for smokers costs much higher as compared to non-smokers.  This is mainly due to the death rate of smokers. The chances of a smoker passing away due to a smoking-related illness are higher as compared to a non-smoker dying due to any other illness. This is why term insurance for smokers comes at a higher premium.

Relation of smoking to term insurance

A term insurance plan is a policy that offers coverage on the life of the insured for a specific period. It attracts the attention of many people due to the low premium, high coverage, and increasing awareness. Many insurers companies have cut down on the operational cost and this has led to a decrease in the premium. If you develop a habit of smoking or drinking after the buying of a term plan, you will have to inform the company about the same, because the risk category will be different.

Insurance companies categorize smokers into three different types:

  1. Typical smoker (An individual with supplementary small health matter)
  2. Preferred smoker (A relatively fit individual)
  3. Table-rated smoker A smoker who has a noteworthy physical condition. 

If you are in the preferred category, you will pay a lower premium as compared to someone who is in the typical category, as you are a fitter policyholder. The term insurance for smokers in the table-rated category will have a high premium because of the high risks to health.

Impact of smoking on the policy

At the time of applying for a term plan, you will be asked about the consumption of tobacco during the past one year. Tobacco comprises all products like cigars, chewing tobacco and cigarettes. You also need to give details regarding the frequency of consumption. It is the insurer’s right to classify you as an occasional smoker or a frequent smoker and the premium will be charged accordingly. The smoker’s life insurance cost will depend on the frequency of use of tobacco products.

If you provide incorrect information or hide details about your smoking habit from the insurer to avoid paying a high premium it will prove to be ineffective and risky. The insurer also asks for a physical examination to evaluate your medical history and assess your current health condition. If you have been dishonest with your insurer, the reports of the physical examination will reveal the truth and the insurer might even terminate the policy.

Life insurance providers consider smoking as a serious condition and base the terms of the policy on the same. A term insurance plan is very important for your family and you need to remember to be honest and open about your health to the insurer.


Author: Chakraborty

Dr Chakrabarty is the Chief Innovation Officer of IntuiComp TeraScience. Earlier she was Assistant Professor of Delhi University, a QS ranked university in India. Before that she has held research positions in IIT Mumbai, IIT Chennai and IISc Bangalore. She holds 2 patents and over 20 research publications in her name which are highly cited. Her area of research is in smart technologies, integrated devices and communications. She also has a penchant for blogging and is an editor of Business Fundas.