Term insurance is a type of life insurance policy that provides coverage for a certain period of time or a specified ‘term; of years. If the insured person dies during the time period specified in the policy and the policy is active, or in force, a death benefit will be paid.
It is a popular misconception among people that one can’t get term or health insurance if he/she is an active smoker. Cigarette smoking is no doubt injurious to your health but it also increases your term insurance premium significantly.
How do insurance companies define smokers?
A ‘smoker’ is anyone who consumes nicotine in any sort of form – cigarettes, cigars, gutka, beedi, khaini, flavoured paan masala or even nicotine patch or gum. The three typical questions asked by insurance companies in this regard are – 1. Do you consume tobacco/nicotine products?, 2. Have you consumed tobacco/nicotine products in the last 4 years?, 3. Have you ever consumed tobacco/nicotine products in your life.
The benefit of low insurance premium is only available to those who have answered No to all of the above questions.
Why the need for high premium from smokers?
It is a general belief that smokers have a lower life expectancy than someone who hasn’t smoked in his life. They are more susceptible to diseases like lung cancer, bronchitis or heart problems.
This extra premium can be different for different insurance companies. The insurers also take into account the age and health of the person buying the health insurance apart from him/her being a smoker.
It is not advisable to hide the fact that you are a smoker or you had been a smoker in the past. An individual can be charged with fraud and the policy can stand to be considered null and void if you hid the fact that you are a smoker.
There are also some benefits if you quit smoking after buying term insurance. The policyholder in this case can request the insurance company to recalculate the premium of his policy at the time of renewal.
The insurance company provide the option of cutting the premium rates depending on the amount of time that has elapsed since the policyholder last smoked.
While different insurance companies have different policies, usually the policyholder needs to stay away from nicotine for at least two years before he/she can be called a non-smoker.
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