A smoker is a person who has been consuming tobacco for the last 12 months, & on average, his consumption is at least 20-40% higher than the non-smoker. Sometimes, a smoker tries to hide their smoking habit to save the premium amount, but it is advisable to inform the insurance company before buying a policy. The mortality rate in the case of smokers is due to severe cancer & lung-related diseases. Hence, it becomes important for smokers to plan for Life Insurance to secure the financial future of their family members.
Types of Smokers
Let us understand the different types of smokers:
- Preferred Smoker
A preferred smoker has scattered smoking habits, i.e. occasionally, like once in a couple of months. Their smoking habit is quite low, & it does not have any impact on health conditions; hence, they are considered fit. The premium amount is a bit higher than that of a non-smoker, but it is the lowest in the smoker’s premium categorisation.
- Typical Smoker
This category is one step ahead of preferred, hence resulting in minor health conditions. They are not denied insurance benefits, even though they are being advised to get medical help for decreasing or removing the smoking habit.
- Table-Related Smoker
This category is the most critical one, as it includes heavy smokers who have medical health issues due to their smoking pattern. These types of smokers are not denied the insurance benefit but rather charged high premium amounts.
Eligibility Criteria
Provided below are the parameters that are to be met to apply for term insurance for smokers:
- The minimum age for smokers to buy term insurance is 18 years, i.e., an adult can apply for term insurance.
- The maximum age for smokers to buy term insurance can be between 55 & 75 years, after which it becomes quite difficult to buy a term plan.
- The minimum tenure for Life Insurance for smokers is around 5 to 10 years, as per the insurer.
- & the maximum tenure can go up to 40 years, hence providing financial coverage to the family members.
- The payment towards premium can be made on an annual basis.
- The minimum amount of sum assured can be INR 3 lakhs & can be up to a maximum of INR 5 crores, depending on the desired coverage you want.
- Present proof of income, along with income & medical reports, in some cases.
Things to know before buying term insurance for smokers
Smokers, before buying a term plan, should know a few things that will help them choose a perfect plan for themselves & their family members:
- Premium Rates
As everyone knows, the premium would be higher in the case of a smoker policyholder. But with the presence of mind & planning term insurance after checking out properly, an affordable plan can be found.
- Coverage
The amount of insurance can go up to INR 50 lakhs & above. To decide the insurance amount, you need to assess the family’s financial requirements, their lifestyle, & your objectives.
- Rider Options
You can also add riders to your basic plan to increase its features, such as critical illness rider, premium waiver rider, & accidental rider. Smokers can opt for critical illness riders due to their health issues.
- Terms & Conditions of Policy
Understand the terms & conditions of your term plan to have better clarity of its inclusions & exclusions.
How Does Term Policy Work for Smokers?
If an individual has been taking tobacco for the last 12 months, he will be considered a smoker. The premium amount is 30-40% higher in the case of smokers than non-smokers, which can be calculated using a Term Insurance Calculator. It has been observed many individuals conceal or mislead information about their smoking habits to save on premiums.
Insurance companies consider it fraud if the correct information is not provided, & the consequences could be serious. It may result in penalties or extra fees being charged. Provided below are some of the consequences that an insured might face if false information is provided:
- Denial of Claim:
In case of the death of an insured due to his/ her smoking habits, the insurance company may deny passing the claim if this habit was not disclosed to the company.
- Cancellation of Policy:
The insurance company might cancel the claim if, during their periodic checks, they found undisclosed smoking habits by the insured.
- High Amount of Premium or Penalties:
If an insurance company gets to know about the undiscovered information, they may increase the amount of premium or penalties, if any.
- Permanent Record:
False or misleading information provided can have a negative impact on your future applications, as the company may flag you.
How to identify Smokers?
Some of the common ways to identify smokers are as mentioned below:
- Self-Disclosure
While buying or renewing the policy, you are required to mention smoking habits, i.e. if you are a cigarette or tobacco addict. You should provide true information, but failing to do so may cause you to face the consequences sooner or later.
- Medical Exams
Many insurance plans with huge coverage amounts require policyholders to undergo a medical examination. Under this examination, you would be asked about your smoking patterns, & certain tests would be performed to detect nicotine.
- Nicotine Testing
During the underwriting process, a nicotine examination is specifically performed to detect nicotine’s presence or its metabolites present in the blood, saliva, or urine.
- Medical Records
Provide your medical records to insurance companies to let them know about your smoking habits or treatments, if any.
Conclusion
It is important for smokers to buy a term plan to provide their family with financial support & mental peace in their absence. Also, some of the plans offer tax benefits, hence reducing the taxable income & increasing savings. Though the premiums are on the higher side in the case of smokers, they should be disclosed to the insurance company.