Do you know India is the second largest in the world when it comes to the number of tobacco users? Yes! there are around 267 million tobacco users in India and the majority of them are from the young generation.

As per World Health Organisation (WHO), tobacco takes more than eight million lives a year. WHO says tobacco kills half of its users. As per the World Health Organisation (WHO) statistics, India alone accounts for approximately 1.35 million deaths a year due to tobacco usage. Some of the worst diseases that are caused by tobacco consumption are cancer, stroke, lung diseases, heart ailments, and chronic obstructive pulmonary disease (COPD). etc along with causing serious damage to the immune system. Tobacco not only causes a health burden but also an economic burden to the country.
Considering the risk of ailments and health hazards of tobacco usage, smokers are considered high-risk individuals by life and health insurance companies. However, smokers can avail of term insurance coverage by paying a higher rate of premium. As smoking increases the mortality risk of an individual, it is considered the key information for life insurance companies. Tobacco usage is one of the main factors that is considered while calculating the term insurance premium.
Understanding the impact of smoking on life insurance premium
The underwriting process of life insurance products varies from one life insurance company to another. However, smoking is one key factor that every insurance company considers in the first place while underwriting term insurance policies in comparison to other factors like an occupation. That means, if you are a non-smoker in a high-risk job, you would pay a lower rate of premium in comparison to a smoker in a low-risk job. Insurance companies may even deny term insurance coverage for a smoker if there are any serious tobacco-related medical conditions found in a pre-policy medical check-up. Smokers are considered people with a high risk of mortality and hence the cost of availing the term life cover is higher in comparison to non-smokers. Let us take an example to understand this.
Let us say, Mr. Suman, a 27-year-old employed in an MNC is seeking INR 50 lakhs of term insurance coverage. The premium for Suman would be INR 7,500 a year if he is a non-smoker and INR 11,000 a year if he is a smoker. That is a huge difference in cost for term insurance. Isn’t it?
As per the underwriting rules of the life insurance companies, the cost of the term insurance coverage for smokers is determined based on the detailed information sought from them. If you are a smoker, the life insurance companies would ask following information to determine the premium for the term insurance coverage that wishes to avail of.
- Frequency of tobacco usage in the last few months or days
- The form in which you take tobacco such as chewing tobacco, cigars, or cigarettes
Based on the above information provided by you, life insurance companies decide whether you are a habitual smoker or an occasional smoker. The term insurance premium would be even higher for habitual smokers than the occasional smokers. There would be a medical check-up before the term insurance policy is issued to you. Medical reports anyways disclose about smoking and thus it is important to not provide incorrect information even if you are an occasional smoker.
It is extremely important to note that smokers can get sufficient term insurance coverage and life insurance companies do not make upright denial. People should not have the misconception that smokers cannot get term insurance coverage. It is crucial for every earning individual to financially protect their family in case of eventualities in the future.
Considering the health risks, it becomes even more prudent for smokers to buy sufficient term insurance coverage to shield their loved ones from the financial consequences of their unfortunate demise or from critical illnesses. Though it is best to come out of addictive habits like smoking, it is equally important to be prepared against the uncertainties of life to secure family members and dependents financially.
Also Read: Setting Financial Goals for Your Future