Life Insurance For Smokers

Who Is A Smoker For An Insurer:

In life insurance terms, an individual who consumes tobacco or nicotine in any form (cigarette, cigar, bidis, chewable tobacco items, etc.) or quantity will qualify as a smoker. Therefore, when you approach an insurer for taking an insurance policy, there are a few questions that your insurer is likely to ask you, pertaining to smoking. Now, to distinguish between a smoker and a non-smoker, life insurance providers usually go into details about your habits and will ask plenty of questions about the same to ascertain which category you fall into. Also, insurers seldom distinguish between someone who may smoke one cigarette a day or the whole pack.

Some of the questions which you may be asked are - Do you smoke? Do you consume tobacco products? Have you consumed tobacco products in the last 3/5 years? If you have replied in affirmative to any of these questions, you will be considered as a smoker by the insurer, which will influence the risk coverage and premiums that you will pay for that coverage.

Life Insurance Risk Coverage Process - Underwriting:

Life insurance as we all know is a contract between the insurer and the policyholder. An insurer will provide an insurance policy on the basis of underwriting, which is the process of assessing the risk that the insured individual carries. After the insurer has assessed the risk involved, they will specify the cost (premium) at which they will provide the life cover (sum assured). When it comes to underwriting, an insurer will take into account all crucial factors associated to the applicant's life before deciding to approve or reject their insurance application. This is done to ensure that the people who the insurer is offering cover to are healthy and carry minimal risk.

Now, insurers carry out two kinds of underwriting when processing an individual's application.

1. Medical Underwriting - Done to evaluate the health and physical risks which the applicant is carrying. Under medical underwriting, the insurer will examine factors such as the applicant's age, health condition, family's medical history, pre-existing diseases, alcohol/smoking habits, etc.
2. Financial Underwriting - The process to evaluate the financial standing of the applicant and to find out whether or not they can pay the premiums for the sum assured that they have chosen to be covered for under the policy. Insurers will evaluate certain factors such as the applicant's income, occupation, details of other insurance policies they hold, etc.

Only after the insurer has analysed the risk associated with the applicant will they decide whether to grant the life insurance at the regular premium, or grant the life insurance at a higher premium (when an extra risk has to be covered), or even reject the life insurance application (if the risk associated is uninsurable).

Impact Of Smoking On Life Insurance Premiums:

Speaking of insurance premiums, a smoker is more likely to pay a higher amount towards life insurance premiums as compared to a non-smoker. This is due to a very simple reason. The risk associated with a smoker is significantly higher i.e. they are far more susceptible to diseases such as various type of cancer (lung, throat, mouth), heart problems, bronchitis, etc. which can cut down their life span. In case of death, the insurer has to pay out the death benefit, which, in turn, can simply lead to an increased number of death claims that that will lead to a loss for the insurer.

However, this does not mean that smokers cannot get a life insurance policy. They will be eligible for life insurance, but will have to pay higher premiums for it. Only when the risk associated with the applicant is too high and is not covered under the scope of the company's underwriting guidelines, the insurance proposal may be declined altogether.

For smokers, the premium charged by insurers on policies vary with company to company. In addition to smoking, insurers also consider a number of other factors (age, health condition of the life to be insured) when deciding on the premiums to be charged. Take a look at the table to get an idea about the differences in premiums charged by different insurers from smokers and non-smokers.

*Premiums for a 30-year old male looking for life cover of up to Rs.50 lakh.

What Not To Do - Hide Your Smoking Habit From Your Insurer:

If you are looking to purchase a life insurance policy as a smoker, do remember that if you hide or misrepresent the fact that you smoke, it can lead to far more serious consequences, financially and legally. If you have taken an insurance policy and fail to mention your smoking habit, then the insurer is well within its right to completely reject a death claim that may arise on your policy due to non-disclosure of details. After all, an insurance contract is based on the sheer 'principle of utmost good faith'. Also, non-disclosure of details at the time of purchasing a policy can also amount to charges of fraud on the part of the applicant.

Top Life Insurance Plans for Smokers

Aegon Life iTerm

The iTerm is an online term plan offered by Aegon Life which is designed to help you provide the best cover to your loved ones and protect them against any uncertainty which arises due to an unpredictable misfortune. This is an affordable plan wherein the premiums can be paid on a flexible basis. This plan comes with a wide range of added features and benefits as well.

Features & Benefits

1. Affordable life protection - This is an affordable plan which offers a high amount of protection at very affordable premiums. You can get cover for up to Rs.1 crore for premiums as low as Rs.462* a month.
2. Customisable life cover option - As you proceed with life, your roles and responsibilities change. This plan gives you the option to customise your life insurance cover as per your changing life situation and need to ensure optimum protection to your loved ones.
3. Built-in terminal illness benefit - In case the policyholder is diagnosed with a terminal illness that is covered under the policy, they will be entitled to 25% of the assured death benefit. Furthermore, their future policy premiums shall be waived.
4. Payout options - Policyholders can choose to receive their payout as per their need. They can opt for their nominees to receive the policy pay out either in lump sum, in 100 fixed monthly instalments, or a combination of lump sum and monthly pay out.
5. Add-on covers - Policyholders have the option to enhance the plan coverage by opting for an add-on cover against accidental death, critical illness, or disability, in exchange for a nominal additional premium.
6. Tax benefits - Policyholders can avail tax benefits on the premiums which they pay towards the policy. Also, benefits received under the policy will be eligible for tax exemption.
7. Cover till old age - The Aegon iTerm policy is one of a select few policies which provides life cover till the age of 80 years.

Bharti AXA Life eProtect+ Term Plan

Among the many online term plans that are now available for purchase, the Bharti AXA eProtect+ is one of the most popular. This is an online term insurance plan which has been designed to be an affordable yet well-appointed plan which comes with plenty of valuable features and benefits. Under this plan, you can choose between 2 death benefit payout options as per your requirement.

Features & Benefits

1. Affordable protection - the biggest benefit of taking this plan is that you can get a high amount of coverage in exchange for very affordable premiums.
2. Flexible benefit payout options - you can choose from 2 benefit payout options. Under the first option, your nominee will be entitled to a monthly income for 15 years in 180 instalments. Under the second option, 50% of the sum assured will be paid in lump sum and the remaining 50% will be paid out annually on the form of increasing instalments over the duration of 10 years.
3. Easy purchase - being an online term plan, you can easily purchase this plan online to not only save time but also effort.
4. Tax benefits - policyholders and nominees can avail tax benefits not only for the premiums paid towards the plan but also the benefits received under appropriate sections of the Income Tax Act, 1961.

Aviva iLife Term Plan

It is everyone's desire to provide their family with the very best of everything. While life is going as usual, one rarely gives much thought to ensuring their family's financial security in case the unfortunate happens. With Aviva i-Life, you can do just that. This is a unique term insurance plan which offers a pure risk coverage along with a range of benefits to help you provide the best protection to your loved ones.

Features & Benefits

LIC Amulya Jeevan II

Among the plethora of term plans offered by LIC, India's largest insurer, the LIC Amulya Jeevan II is one of the most popular. This is a pure risk protection plan which offers a minimum sum assured of Rs.25 lakh. The death benefit will be payable in case of the sudden death of the policyholder before the end of the policy term. The plan can be taken by any individual who is aged between 18 to 60 years for a term of 5 years to 35 years. Some of the features of this plan are mentioned here.

Features & Benefits

Conclusion

Smoking is something that is bound to adversely affect not only your insurance premiums but also your health. While it is not impossible to get a life insurance policy being a smoker, it is in your own interest to quit the habit, so you can not only save on premiums but also get a chance to become healthier.

* Premiums may vary based on age, location, plan term, GST, and other factors.