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A Quick Rundown to 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.

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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.  

Different 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 Plan

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

Insurer

Plan

Maturity age

Add-on Riders

Description

Aditya Birla Sun Life Insurance

LifeShield Plan

 
  • Accidental death and disability rider
  • Critical illness rider
  • Surgical care rider
  • Hospital care rider
  • Accidental death benefit rider plus

The LifeShield plan offers you flexibility in choosing your protection based on your family's needs. With 8 variants to choose from and 5 riders to enhance your protection, the term plan offers something for everyone. The plan also has an inbuilt terminal illness benefit that pays out 0% of the sum assured immediately upon being diagnosed with a terminal illness, and all future premium payments are waived off.

Aegon Life Insurance

iTerm

100

  • Accidental death benefit rider

Aegon iTerm plan offers you the ability to choose your level of protection from 3 variants of the plan. Enhanced with riders and premium benefits that encourage you to lead a healthy life, this plan covers you for a long life of 100 years with 36 different critical illnesses covering up to 80 years. The plan also covers you for Covid-19. For smokers, the plan offers the choice to quit smoking and reduce their insurance premiums from the second year.

Bajaj Allianz General Insurance

Life Secure

100

  • Critical illness rider
  • Accidental death benefit rider
  • Waiver of premium
  • Accidental total disability rider

This term plan is designed to cover all your insurance needs with 3 plan variants which decide the payouts and 4 riders to enhance your insurance cover. Return of premium benefit is available as an option under this plan where the insured gets the entire premium amount back at maturity if the insured is hale and hearty. With a high claim settlement ratio of 98.02% and  a guarantee of 1-day claim approval, this plan provides many unique benefits.

Canara HSBC OBC Life Insurance

iSelect

99

No riders available under this plan.

The Canara HSBC OBC Life insurance plan offers the comfort of all basic covers offered by the term insurance plans like life cover up to 99 years and terminal illness cover. It also provides a Return of Premium offer, which pays back the premium amount upon maturity. The plan also has terminal illness cover, which pays out 100% of the sum assured upon the insured being diagnosed with a terminal illness.

Exide Life Insurance

Exide Life Smart

75

  • Exide Life Accidental Death, Disability and Dismemberment Rider
  • Exide Life Critical illness cover

This plan with 3 variants is for people who want to benefit from a lifelong insurance cover along with the benefit of the return of your premiums upon maturity with more than 100% return of your premiums paid. The three variants, along with the rider, provide a comprehensive life cover. The return of premium feature is embedded in all three variants of this plan, making it an insurance and savings plan. The insured gets back the premiums paid in case of survival at policy maturity.

Edelweiss Tokio Life Insurance

Protection Plan

80

  • Accidental total and permanent disability rider
  • Accidental death benefit rider
  • Waiver of premium rider
  • Critical illness rider

The Edelweiss Tokio Protection Plan is designed to be a flexible term insurance plan to fit your insurance cover requirements. Loaded with features like limited premium payment option, premium benefits for leading a healthy lifestyle, and premium benefits on the higher sum assured, this plan provides increased flexibility and excellent benefits.

Future Generali India Insurance

Future Generali FlexiOnline Term- Lumpsum

75

  • Future Generali Accidental Benefit Rider

This is an excellent plan for people who are looking to insure the income levels of their families. The plan offers 4 variants that, in addition to basic life cover, also provide options for having income protection so that the family of the insured continues to enjoy their lifestyle even in case of any unfortunate incident occurs, leading to fatality.

HDFC Standard Life

Click2protect plan

75

  • Income benefit on accidental disability rider
  • Critical illness plus rider

This plan is meant to be a highly flexible term insurance plan with 9 variants to cater to your insurance cover needs. You can select the type of insurance cover, the sum assured, the payout options, and get a highly customized insurance cover. The plan also covers accidental death benefits, terminal illness benefits, critical illness cover, and premium return under specific options. Moreover, you can also opt to increase your insurance cover with a top-up feature.

ICICI Prudential Life Insurance

iProtect Smart Lumpsum

99

  • Critical illness rider
  • Accidental death benefit rider

ICICI Prudential has established itself as a reliable insurance company over the years. The iProtect plan provides you the same reliable insurance cover with the flexibility to enhance your basic life insurance by adding riders. The plan offers 4 variants in terms of payout options and covers your life up to the age of 99 years. The plan also provides you the choice of protecting your insurance cover under the Married Women’s Property Act (MWP Act) to ensure that the sum assured is paid to your spouse, and no one else can lay a disputed claim upon it.

IndiaFirst Life Insurance

e-Term Plan

65

No riders available under this plan.

With 8 variants in payout options and insurance cover, this plan is designed to be flexible and suit your insurance coverage needs. The plan offers the flexibility to select your sum assured based on your needs and provides a basic death benefit, accidental death and disability cover, critical and terminal illness cover. It also offers you the flexibility to draw down up to 10% of the sum assured for significant life events like marriage, construction of your house, and starting a business.

Kotak Life Insurance

e-Term

75

  • Kotak permanent disability benefit
  • Kotak critical illness plus benefit rider

The Kotak term insurance plan offers you 3 plan options with the flexibility of 3 payout options. The plan also offers premium benefits to non-tobacco users and women insured. The plan also provides the feature of stepping up your insurance cover by topping up your premium without the hassles of a medical check-up. The policy also covers up to 37 different critical illnesses like blindness, cancer, and limb loss.

LIC

e-term

75

No riders available under this plan.

LIC is a renowned name for decades in the insurance sector and is backed by the Government of India. LIC offers a highly reliable term insurance plan that offers basic life cover. LIC offers a basic term insurance plan which caters to the people who require a simplified insurance protection without going into too many details.

Max Life Insurance

Smart Term Plan Life Cover

85

  • Accidental cover

Max Life insurance offers 7 different payout options and multiple premium payment options to provide you the flexibility in choosing the insurance you need. The plan also provides premium benefits for customer loyalty, non-smokers, the higher sum assured, and women insured. Max Life insurance boasts a claim settlement ratio of 99.22%. The plan allows limited premium pay so that you can plan your premium payments up to the age of your retirement.

PNB Metlife Life Insurance

Mera Term Plan 

75

  • Accidental death benefit
  • Accidental disability benefit
  • Serious illness cover
  • Critical illness cover

The plan offers 4 different options for payout and multiple options for premium payments. This plan also provides the flexibility to increase your insurance cover at critical stages of your life like marriage, first child, and second child. The plan also offers you the ability to cover your spouse under the same plan and protect your entire family. Joint term insurance is much cost-effective compared to opting for two different term insurance policies, thus saving you more money.

Reliance Nippon Life Insurance

Reliance Digi-Term

65

  • Accidental Death Rider
  • Accidental Death and Disability Rider
  • Accidental Death and Disability Plus Rider

This plan offers complete insurance cover to you and your family from unfortunate life events. With 7 different plan options and premium payment options, the plan provides flexibility and value for money. The plan also covers terminal illness and guarantees a 10-day claim settlement. You can also increase your insurance cover under this plan at critical life stages like marriage or having a child. With a life cover that grows each year, the plan intends to keep pace with your own growth in life and the security of your lifestyle.

SBI Life Insurance

eShield

80

    • Accidental Death Benefit Rider
  • Accidental Total & Permanent disability rider

The plan offers the benefits of a term insurance cover like death benefit and terminal illness cover. Combined with the riders and the option to have increasing cover, this plan offers you the ability to provide long-term security to your family, beating inflation and enhancing the cover to the future living standards. The plan also covers taking a second medical opinion in case of a diagnosis of certain illnesses and the expenses related to the same.

Tata AIA Life Insurance

Tata Maha Raksha Supreme

85

  • Tata AIA Accidental Death and Dismemberment

Tata AIA term insurance is designed to meet the broad spectrum of insurance protection needs for every family. The plan offers the basic life cover to increase the life cover at important milestones of life. The plan provides an accelerated payment of 50% of the sum assured in case the insured is diagnosed with a terminal illness and the flexibility to cover accidents through a rider. The plan also offers premium benefits to non-smokers and women insured.

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.

Term Insurance for Occasional Smokers - 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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