An insurance policy that covers only the death risk of an individual during a term or a period is called a term insurance plan. A term plan works to secure the financial health of the individual’s family after his death.
In case of the death of the insured person before the expiry of the term, the nominee receives the guaranteed death benefit. However, if the insured person survives the term, no survival benefit is payable by the insurer. The premium payable on a term plan depends on the age, health, and life expectancy of the insured. However, one can opt for additional rider benefits on the plan at extra cost.
Smokers run additional risks due to the health impact of smoking, which is known to lead to several health conditions including high cholesterol, heart and lung diseases, respiratory problems, cancer, etc. that cut life expectancy.
With around 12 % of the world's smokers as per World Health Organization (WHO), 52% of all deaths in India are linked to smoking. It has been determined that the life expectancy of a smoker is significantly lesser than that of a non-smoker. Smokers, therefore, need to seriously consider buying a suitable term plan to secure the financial health of their family in case of an unfortunate event.
When buying term insurance for smokers, the person must be truthful in his declaration of facts about the smoking habit, i.e., whether he is a Preferred Smokers, Typical Smokers, or Table rated Smokers.
As there is a broad scope of term protection plans accessible in the market, picking a well-suited arrangement can generally be an overwhelming assignment for protection purchasers. Distinctive protection suppliers offer an alternate sort of term protection plan, and each arrangement differs from another dependent on different variables.
Hence, to pick the best arrangement according to one's necessity and reasonableness, it is imperative to look at term protection plans online before focusing on one. While contrasting term protection plans, it is essential to check the different parts of the strategy, for example, Insurance Coverage, Maturity Age, Claim Settlement Ratio, and so forth. By looking at the statements of different term protection designs, the approach purchasers can pick the arrangement, which satisfies their necessity at a reasonable premium rate.
|Smoker type||Health Issues due to smoking||Premium|
|Typical Smoker||Minor health issues||Higher Premium|
|Table rated Smoker||Significant health issues||Maximum Premium|
Preferred Smokers run the minimum risk; typical smokers run higher risk while table rated smokers run the maximum risk and, therefore, the highest premium.
The general features of term llife insurance for smokers are different from those of non-smokers. Smokers need to carefully note the terms if they wish to take advantage these plans offer to secure the financial health of their family.
|Eligibility age||Minimum of 18 years||Max 75|
|Policy term||Min 5-10 years||Max 30-40 years|
|Sum Assured||Min Rs 3 lakh||Max As requested by the insured person|
|Premium payment||Annual payment|
|Eligible persons||Resident Indian national|
|Benefit||Sum assured to the nominee on death||No survivor maturity benefit|
It is pertinent to note that for insurance companies, the term ‘smoker’ also includes persons who consume tobacco or nicotine as cigar, beedi, gutka, khaini, flavored pan masala, nicotine chewing gum, besides smokers of cigarettes. Insurance companies also consider people who occasionally smoke as smokers. It is therefore advisable to keep away from cigarettes, tobacco, and nicotine not only to enjoy good health but also to enjoy low premium on term insurance.
At the time of buying term insurance for smokers, they are required to provide relevant information about their smoking habits. They will also need to undergo a medical test. It is, therefore, in the interest of individuals who smoke to provide accurate information about their smoking habits. Furthermore, they may be required to answer various questions as to whether they had ever consumed tobacco or nicotine products in the past four years. There will also be questions about their smoking habits in the application form, which they will be required to fill in.
Some term plans allow smokers to opt for an Accelerated Death Benefit rider with the term plan. Under the rider, the insured person can avail of part of the Sum Assured for the treatment of a terminal illness. The insured person will have to provide medical reports of the illness. The nominee will get the balance amount of death benefit left after utilization of the part during the insured's illness. Insurance companies offer such benefits to their plans. Individuals are, therefore, advised to carefully read the terms of the plan carefully to select the right plan to suit their needs.
With the myriad term plans on offer from scores of insurers, it becomes essential to evaluate different plans to ensure a very close fit to serve a person's requirements. Selecting the right plan is, therefore, a task that takes a certain amount of research and study. The best approach is, therefore, to start with identifying the must-have features and how well these measure up to your requirement:
This is, of course, the number one consideration as sufficient coverage is what is desired by all who wish to be insured. The sum assured should not only cover the insured person's debts but also ensure a comfortable lifestyle for the person's family members to post his/her demise. At the same time, the premium amount should not end up straining the family budget. Striking the right balance will make all the difference between prudence and excess.
The time spent studying the features and benefits offered by insurance companies under various plan offerings goes a long way in making the right choice of the plan. It is important to check whether the policy offers the flexibility of choice as regards the amount, inbuilt features like terminal/critical illnesses, accidental death benefit, and the modes of premium payment.
Riders enhance the value proposition of term insurance plans in many meaningful ways. Riders come with extra costs, but it is a good idea to carefully compare the riders offered by insurers to realize the potential of the policies fully. Some of the riders offered include critical illness rider, accidental death benefit cover, etc. But in the final analysis, how well the riders fit the requirements is of prime importance. Some of the common riders are:
This is best gauged from the claims settlement ratio of the company, which is the ratio of settled to the total claims raised. A high claim settlement ratio means the company can be trusted in settling claims as and when they arise. The claim settlement ratio of a company is a fair index of the company’s ability to settle claims when the need arises. This factor is, therefore, an important consideration while comparing term insurance plans.
Before buying a term insurance policy from a company, a thorough check of the company's reliability and stability is in order. It helps build trust in the company among customers. The greater a company's reputation and the goodwill it has built, the higher the prospects of a speedy and hassle-free claims settlement. Therefore, before buying a term plan, customers would do well to factor in the insurance company's business standing.
Term insurance plans can be bought both offline and online. Offline purchase is the traditional method which involves agents, brokers, and other intermediaries. Online plans can be bought over the internet, directly from the insurer's website.