Impact on premium for smoker and non-smoker

Smoking is not only bad for your health but also it can cost you a fortune on your life insurance premiums. As per Insurers, risk of smoking such a great health hazard that they charge premiums as high as a third more for a 30-year-old smoker than they would for a non-smoker. Looking at the enormity of the health impact many governments world over levy heavy taxes on the consumption of this lethal habit. Since smokers have shorter than average life span they are more likely to claim on an insurance policy by suffering an early death, or a critical illness. Therefore, it is important to understand all the nuances of this clause. Are occasional smokers, rated at par with a regular smoker? Most insurers will classify you as a smoker if you have used tobacco in the last 12 months. That includes everyone, from the 20-a-day cigarette smoker, to someone who has a cigarette once in a blue moon.

However, most insurers will ask you a couple of questions to understand the severity of the habit and the overall impact it may have caused on your life.

Since premiums for smokers are so high, people are generally tempted to not disclose this habit, hoping that this won’t cost that much. This however, is a risky preposition. If the insurance company eventually finds out during the course of the policy that the insured is a smoker and has chosen not to disclose this, it can lead to cancellation of policy without any refund. Or, if at the time of claim it is detected in the medical records that insured was a smoker then company can deny claim pay-out. Second situation is even harsher because in that case you lose out all your invested premium paid during the course of the policy with agony of no benefit. Therefore it is sensible to be safe and declare correct smoking habits at the time of purchase or at any time during the course of the policy if you pick up smoking.

If someone eventually quits smoking, the premiums can reduce provided medical reports suggest health of the insured has improved, keeping in mind the other parameters of underwriting the risk remain constant.