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Features
Ref. No. KLI/22-23/E-BB/492
Insurance premiums for smokers are affected by the increased health risks, shorter life expectancy, and higher medical costs.
One of the biggest myths in the insurance and health field is that smokers cannot avail the benefits of life insurance. Contrary to this popular belief, life insurance companies offer life insurance to smokers with a different set of terms and conditions than non-smokers. While smoking can be dangerous to your health, it can also make you churn out extra money to buy term life insurance.
Smoking, in any form, significantly impacts insurance premiums and coverage options. Life insurance providers assess an applicant’s smoking habits to estimate the associated risk and determine appropriate terms accurately. From the definition of smokers to the categorization of non-smokers and various smoker types, insurers employ a structured approach to underwriting policies.
Both smokers as well as non-smokers are eligible for term life insurance. However, smokers’ classification into different categories enables insurance companies to decide the premium amount for various individuals depending on their smoking habits. Here is the comparison for buying life insurance for smokers and non-smokers:
Feature |
Smoker |
Non-Smoker |
Premium Cost |
Higher (1.5-2 times more expensive) |
Lower |
Reason for Cost Difference |
Increased risk of death due to smoking-related illnesses |
Lower risk of death |
Life Expectancy |
Lower |
Higher |
Health Requirements |
May require additional medical tests |
Typically fewer medical tests required |
Eligibility for Discounts |
Some insurers offer discounts for quitting smoking (after a waiting period) |
May be eligible for discounts based on healthy lifestyle habits |
According to life insurance providers, a smoker is an individual who consumes tobacco or nicotine in any form. The said individual might consume tobacco/nicotine in the form of cigarettes and other tobacco substances.
Life insurance providers have different ways to ask an individual whether or not he smokes. Some of the most common questions posed by them are:
It is also common for insurance companies to ask for your past medical records as a routine part of life insurance applications.
The smoking habits among insurers vary, leading some insurance providers to classify smokers into distinct categories. Let us take a look at the categories insurance companies prefer for smokers and non-smokers:
Individuals who have not used tobacco or nicotine products within a specified period, typically ranging from the past 12 months to several years, depending on the insurer. Non-smokers typically qualify for the lowest premiums since they are considered to have the lowest risk of developing smoking-related health issues.
Some insurers might have a category for individuals who smoke occasionally or have recently quit smoking but still use nicotine products. Preferred smokers may have slightly higher premiums compared to non-smokers but lower premiums than typical or table-rate smokers.
This category typically includes individuals who smoke regularly and use tobacco or nicotine products on a daily basis. They are considered to have a higher risk of health problems related to smoking, and thus, they usually face higher insurance premiums compared to non-smokers and preferred smokers.
Table-rate smokers are individuals who may have a history of smoking-related health issues, such as respiratory problems or cardiovascular diseases. They are considered high-risk by insurers and are often placed in a separate category with significantly higher premiums compared to non-smokers and other smoker categories.
These categories help insurers accurately assess the risk associated with insuring individuals who use tobacco or nicotine products and determine appropriate premium rates accordingly. Applicants need to disclose their smoking habits truthfully during the underwriting process to ensure they receive the appropriate coverage and premiums.
Term life insurance for smokers has higher premiums than non-smokers because of the increased risk they pose to insurance companies. Here are some of the reasons:
Smoking is a well-documented risk factor for numerous health problems, including cancer, heart disease, and respiratory illnesses. These conditions are not only expensive to treat, but they can also lead to premature death. Since insurance companies pay out claims upon death, smokers statistically have a higher chance of requiring a payout sooner, leading to higher costs for the insurer.
Smokers generally have a lower life expectancy compared to non-smokers. This means the insurance company is more likely to have to pay out a death benefit sooner for a smoker. To account for this higher risk, they charge a higher premium.
Smokers typically require more medical care throughout their lives due to smoking-related illnesses. This translates to higher costs for the insurance company, which they reimburse through higher premiums for smokers.
If you are a chain smoker with a heavy smoking habit, it would be advisable for you to choose a term life insurance plan that offers a large sum assured at a nominal premium charge, which would be an economical way to provide an adequate level of financial protection to your family in case of your unfortunate demise tomorrow.
If you are a complete non-smoker, the credit goes to you for choosing to keep yourself healthy. Nevertheless, it is never a bad idea to secure the life of your loved ones with a term life insurance plan. Even though you would keep yourself away from harmful habits of smoking and maintain the best diet, you are bound to fall into the health complication trap someday. Hence, it would be best to stay prepared for tomorrow’s uncertainties with reliable term life insurance.
Whether you are a smoker or not, you always have to be honest with your insurer while purchasing a term life insurance plan. It would enable your term insurance provider to find the best term policy with the ideal premium charges for you based on your smoking habits and health conditions. As a smoker, having term insurance will help you cope with financial difficulties smoothly.
1
Smokers may require additional medical tests during the underwriting process to assess health risks accurately.
2
Some insurers offer the possibility to transition to non-smoker rates after a certain period of being smoke-free. Check with your insurer for eligibility criteria.
3
Yes, many insurers offer customizable term life insurance plans for smokers, allowing you to tailor coverage and benefits to your needs.
4
Misrepresentation of smoking status can result in policy cancellation or denial of benefits. It is crucial to provide accurate information during the application process.
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Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.
Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors
Features
Ref. No. KLI/22-23/E-BB/2435
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The content has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Further customer is the advised to go through the sales brochure before conducting any sale. Above illustrations are only for understanding, it is not directly or indirectly related to the performance of any product or plans of Kotak Life.
