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Term Insurance for Occasional Smokers

Term Insurance plans are straightforward insurance plans that offer coverage for the life of the policyholder until a certain specified time. If the policyholder expires within that period, the insurer pays death benefits to his/her beneficiaries. One can get comprehensive coverage against premiums paid. However, just like any other financial instrument, term insurances come with a set of criteria.

The premium amounts that one pays against such term insurances vary. Women have a lower rate of premium as compared to men; a young policyholder also enjoys similar low-cost benefits as compared to their aged counterparts, and smokers have to pay more than a non-smoker to avail the same benefits under term insurance. The reason for all of the above is the same- the health expectancy varies between genders, age, and consumption of tobacco. 

Tobacco consumption is harmful to health, and insurance companies privy this. For smoking individuals who are looking to provide financial security to their families with life insurance, the premium rate is comparatively higher than that of a non-smoker, but it is affordable.

Why do Smokers Need Term Insurance?

A person consuming tobacco or other nicotine related products is called a 'smoker.' The probability of health hazards among these smokers is much higher than that of a non-smoker, with common tobacco-related ailments like heart and lung diseases, respiratory problems, ulcers, heart attacks, cancer, etc.

Due to smokers being prone to such risks, it is essential to look ahead and make sure that the family does not suffer the financial consequences of such health problems. This is why term insurance for smokers is necessary to secure the future of their loved ones and to afford medical expenses if such a health emergency occurs.  

Types of Smokers

A medical check-up of the applicant is a pre-requisite for buying term insurance. Therefore, even if the applicant conceals his/her smoking habit from the insurer, the health check-up reveals it all.

However, not all smokers have the same consumption habits, and insurance companies realize this. Therefore, there are three segregations of smokers, depending on their consumption. The rate of premium charged differs in each category.

  • Preferred Smokers

    Preferred smokers are the ones who are generally fit apart from their smoking habit. The rate of premium for such smokers is the least among the three categories. 

  • Typical Smokers

    These are smokers who have petty health issues owing to their tobacco consumption. These may include cough or small respiratory lags. The rate of premium for typical smokers is higher than those of preferred smokers. 

  • Table-rated Smokers

    Table-rated smokers are the ones with notable underlying health problems due to their tobacco consumption. Because the life expectancy of these individuals is low, the premium rate for this category is the highest.

    It is the sole discretion of the insurance provider to determine whether the applicant seeking term insurance is an occasional smoker or a seasoned one. Based on this, the rate of the premium would vary between the above classifications.

Disclosure of Information Before Buying a Term Insurance

To effectively gauge health risks, applicants must undergo medical examination before they buy term insurance. Additionally, the application form also asks particulars relating to smoking habits to be filled in by the applicant. It is best to furnish such information in the application form itself, as any concealment of smoking habit may lead to complications in claiming the sum assured, at a time when it is needed the most by dependants. 

Failure to do so would amount to fraud, and the policyholder may face the following unwanted consequences of such:

  • Individual may be held liable for scam and will be charged with fraud
  • The policy stands null & void altogether, resulting in the termination of all the benefits that the beneficiaries of the policyholder are entitled to

It is best then to reveal all information by the smoker before buying the policy.

Features of Term Insurance for Occasional Smokers

Term Insurance for smokers varies with term insurance for non-smokers. The general features of term insurance for smokers are:

  • Age of Entry – The age of entry for smokers in term insurance plans is 18-75 years
  • Policy Term – The policy tenure available for smokers is a minimum of 5-10 years, up to a maximum of 30-40 years.

  • Sum Assured – The minimum sum assured is Rs 3 Lakh. The maximum amount can be as per requested by the policyholder.

  • Payment of Premium – The premium payment mode is annual.

  • Receipt of Sum Assured – The nominee receives the sum assured upon the demise of the policyholder within the policy term.

  • Maturity Benefits – No maturity benefits are paid under term insurance for smokers.

  • Additional Riders – Rider benefits are available depending upon the insurance provider.

Benefits of term plans for Smokers

Even though the premium rate is high, term insurance is nevertheless beneficial for smokers. Due to the many health risks persisting among individuals with tobacco consumption, this reason alone makes it more prudent for smokers to secure the future of their families.

  • A Safety Net

    Death is inevitable, but term insurance is the lifejacket that keeps one's descendants afloat during a financial crisis.

  • Tax Benefits

    All premiums paid under term insurance schemes are subject to tax benefits for the policyholder under The Income Tax Act, 1961.

  • Rider Benefits

    The most common type of rider available under term insurance for smokers is the accelerated death benefit rider. Under this benefit, the insured can withdraw a certain part of the sum assured if the policyholder suffers from any terminal illness during the policy term. Upon the death of the policyholder, the dependants get the balance amount remaining.

Term Plans available for Smokers

Basis Aegon Life i-Term HDFC Click 2 Protect Aviva iLife LIC Amulya Jeevan
Sum assured 25 lakh/No upper limit 25 lakh/No upper limit 25 lakh/No upper limit 25 lakh/No upper limit
Policy Term 5-62 years 10-40 years 10-35 years 5-35 years
Entry Age 18-65 years 18-65 years 18-55 years 18-60 years
Age at maturity 80 years 75 years 70 years 70 years


Rider benefits
Accidental death, critical illness, premium waiver, permanent disability Accidental death & life-stage protection No rider benefits are available No rider benefits are available.

Disclaimer: Paisawiki does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.

Rider benefits Accidental death, critical illness, premium waiver, permanent disability Accidental death & life-stage protection No rider benefits are available No rider benefits are available. 

FAQs

  • Q: What is the extra rate of premium charged?

    Ans: The rate of premium depends upon age, gender, smoking habit, and applicant's overall health. It also varies among insurance providers, and riders opted for. Generally, it is a factor of a few thousand more than a non-smoker's premium.
  • Q: What if the applicant quit smoking recently?

    Ans: The insurance company inquires about the tobacco usage of the applicant for the past 12 months. The same can be found out upon a medical examination, as nicotine traces can still be found long after the user ceases to smoke or consume tobacco.
  • Q: What if the policyholder quits tobacco usage after buying the policy?

    Ans: If the policyholder has quit or is in the process of quitting, they may ask the insurance provider to re-consider the premium rate at the end of every policy year. The insurer may decrease the premium amount based on the time elapsed since the policyholder's last smoke.  

    While every insurance policy contains the terms and conditions relating to this, it generally takes about 2 years for a smoker to be classified into a non-smoker.

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