Smokers and Term Insurance: Premium Increase and Eligibility Explained
If you are someone who smokes, you might have wondered whether you are eligible for term insurance or not. The answer to this is yes, you are eligible for term insurance, but there are certain factors that come into play when it comes to your premium and coverage. In this article, we will discuss the impact of smoking on term insurance and how it affects your eligibility, premium amount, and coverage.
Impact of Smoking on Term Insurance
Smoking is a risk factor that can negatively impact your health in various ways. It is an obvious fact that smoking is injurious to your health, and it can lead to various health issues such as cancer, heart disease, and respiratory problems. According to the World Health Organization (WHO), smoking is one of the leading causes of death worldwide, with around 8 million deaths each year.
Considering the negative impact of smoking on health, insurance companies charge a higher premium from smokers as compared to non-smokers. Moreover, smokers may face some restrictions in terms of coverage as well. For instance, certain types of cancers may not be covered under term insurance if the policyholder is a smoker. Additionally, in case of the death of the policyholder due to a smoking-related illness, the insurer may reject the claim if the policyholder had not disclosed his/her smoking habit at the time of policy issuance.
Eligibility for Term Insurance for Smokers
Being a smoker does not make you ineligible for term insurance. You can still apply for and get a term insurance policy if you are a smoker. However, the insurer will consider your smoking habit while calculating the premium amount and determining the coverage amount.
Premium Increase for Smokers
Smokers have to pay a higher premium as compared to non-smokers for term insurance. The reason for this is the higher risk that the insurer undertakes while insuring a smoker. Tobacco users are more likely to suffer from health issues than non-smokers, and this risk is reflected in the premium amount. On average, smokers have to pay 30-40% higher premium than non-smokers for term insurance.
Moreover, factors like the age of the policyholder, policy term, sum assured, and smoking frequency, also determine the premium amount. For instance, if someone smokes more than a pack of cigarettes per day, then he/she may have to pay a higher premium as compared to someone who smokes less frequently. Similarly, if the policy term is longer, then the premium amount will be higher, as the insurer is exposed to risk for a longer duration.
Coverage Amount for Smokers
Smokers may also face restrictions in terms of coverage amount under term insurance policies. The coverage amount is the amount payable to the nominee in case of the policyholder’s death during the policy term. Insurers may restrict the coverage amount for smokers as they are at a higher risk of developing health issues. Moreover, some critical illnesses, such as lung cancer or throat cancer, may not be covered under term insurance for smokers.
Disclosing Smoking Habits
Being honest while disclosing your smoking habits at the time of policy issuance is essential. Non-disclosure of smoking habit can lead to rejection of claim in case of the death of the policyholder due to a smoking-related illness. Therefore, it is recommended that smokers should honestly disclose their smoking habits while applying for the policy, even if it leads to a higher premium amount.
In a Nutshell
Smoking is a health hazard, and insurance companies charge a higher premium from smokers as they are at a higher risk of developing health issues. Smokers can still avail themselves of term insurance, but the premium amount and coverage may be impacted by their smoking habits. It is recommended that smokers should honestly disclose their smoking habits while applying for the policy to avoid claim rejection in case of the death due to a smoking-related illness.