Smoking is injurious to health is one slogan we see everywhere. It is not only harmful to health but also burdens people’s finances. And yet, it’s a habit not many find easy to kick. Smoking and secondary smoking can cause a range of respiratory illnesses, affect your quality of life and in many cases, lead to cancer. According to the WHO, tobacco is the cause of over one million deaths every year in India (1).
Impact on premiums
In the wake of the negative impact of smoking, how do insurers look at this harmful habit? Typically, smokers would need to pay a higher premium than those who don’t smoke when they buy a term plan. The reason is simply that smokers have a greater rate of mortality than non-smokers.
If a 40-year-old opts for a term insurance plan for a sum assured of Rs 1 crore, and is a fit and non-smoking male, the premium paid for a term of 20 years is just over Rs 800 monthly. However, for a smoker of the same age, this number may go up to Rs 1,000 per month. Just as age and gender make a difference to premium payments, so does smoking or non-smoking.
Who is a smoker and how are smokers categorised by insurers?
There are three categories that insurers go by. A typical smoker is one who is a smoker with some minor health issue. A preferred smoker is one who is a smoker but is otherwise fit and in good health while a table-rated smoker is one who has a significant physical issue. The insurer takes a call on the premium charged for the term plan, based on the individual’s habits.
Insurers may ask questions pertaining to the individual’s smoking habits. Anyone who uses tobacco or nicotine in their various forms, including cigars, cigarettes, beedis, nicotine patches, pan masala or khaini, among others is considered a smoker for the purpose of insurance. Questions pertain to which product an individual may use and the frequency of use.
If an individual develops the smoking habit after opting for the insurance plan, it is important to update the information to the insurer because withholding information may have consequences such as termination of policy or pressing of charges for scamming.
How does term insurance work?
Before one opts for insurance cover, it’s important to understand the concept of term insurance. A term plan is among the most popular types of insurance plans because it allows an individual to choose a term or a timeframe for coverage. In the unfortunate event of the individual’s death during the term of the insurance plan, the benefits are paid to the nominee. The reason term insurance is popular lies in its simplicity of structure. All you need to do is pay your premium at specific intervals and seek coverage for the term you have chosen. That’s why it is called a pure protection plan. It is different from other traditional insurance plans because there are no maturity benefits involved.
Another reason a term plan is popular is because it is more affordable than traditional insurance plans. The premium you pay is much lower than what you pay for other traditional insurance schemes. Also, there is flexibility involved -- your policy ends if you wish to exit it. All you would need to do is stop making premium payments. A term plan also comes with riders, which are essentially add-ons that protect you further from certain critical illnesses, disability, accidental death, inability to pay premium owing to financial constraints such as a job loss. There is even a monthly income rider that the family can avail of in the case of the insured person’s death. A term plan allows for tax deductions on premium paid under Sec 80C. If you have opted for a health rider such as critical illness, you can avail deductions under Sec 80D.
If you are a smoker and want insurance, you should do your research and pick a term plan that offers a range of riders to choose from, apart from the option of choosing sum assured, term of the policy, premium payment terms and mode of payment. You will be asked questions on your lifestyle, health, age and gender before a quote is generated. You would need to remember that the age at entry should be 18 years or above, while the age at maturity should be at least 28 years.
Choosing the iSelect Star Term Plan from Canara HSBC Oriental Bank of Commerce Life Insurance ensures affordable cover, option of adding spouse to the same policy with discount, and multiple premium payment options. What’s more you can buy online anytime, thanks to a seamless and efficient interface.
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