Term Life Insurance Plan for Smokers vs Non-Smokers

Madhav, a 30-year-old, is an occasional smoker. He does not disclose his smoking habits when applying for term life insurance, under the assumption that it will not affect his application since he does not smoke regularly.

However, the insurer finds out that he is a smoker during the verification process and rejects the application right away on the grounds that he has hidden his smoking habits from the declaration.

So, Madhav’s case clearly shows that the insurer has the right to reject the application in the event of non-disclosure of any crucial information, including lifestyle habits.

Having said that, there is always a common question among people as to whether smokers qualify for term life insurance. If so, how much does an insurer charge for a smoker and a non-smoker? And how do they categorise smokers?

All of these questions will be answered in this article.

How Do Insurers Define Smokers?

Generally, individuals are classified into two types by insurance companies.

• Smoker
• Non-smoker

Term insurance policies are pure risk covers that provide risk coverage on your life for a set amount of money over a set period of time. Your premium may vary based on which category you fall into.

If you maintain good health and don't smoke, the insurer will approve your term insurance proposal standard prices. In order to qualify for a standard non-smoker rate, you must not have consumed nicotine for a specific time period. Some insurers may check if you have not smoked in the past 12 months, whereas some will check if you have not smoked in the last 3 years, and so on. Insurance companies have higher rates for smokers.

While filling out the application form, you may be asked questions about smoking habits, like -

• Do you smoke?
• Have you consumed any tobacco or nicotine products?
• When was the last time you smoked?
• How often do you smoke?
• How many cigarettes do you smoke in a day?

How Do Insurance Companies Categorise Smokers And Non-Smokers?

Insurance companies typically categorise individuals into two groups: smokers and non-smokers, based on their tobacco use habits. This classification primarily hinges on whether the individual has consumed tobacco products within a specific period, often within the preceding 12 months. Tobacco products encompass a variety of items such as cigarettes, cigars, pipes, chewing tobacco, and nicotine replacement products.

Non-smokers are individuals who abstain from using any tobacco products altogether. Conversely, if an individual has utilised any form of tobacco within the stipulated time frame, they are usually categorised as a smoker for insurance purposes. Here are some common classifications of smokers:

• Preferred Smoker: Someone who smokes but is in good physical condition and overall health, demonstrating fitness and wellness despite the smoking habit.
• Typical Smoker: Someone who smokes and may have minor health issues. While they engage in smoking, the associated health concerns are minor.
• Table-Rate Smoker: Someone who smokes and exhibits visible health problems directly attributed to smoking. This category is associated with higher risk, reflecting more significant health issues due to the smoking habit.

Term Insurance Smoker And Non-Smoker

Why Do Smokers Pay Higher Premium Prices For Term Insurance Than Non-Smokers?

Smokers typically face higher premium prices for term insurance compared to non-smokers due to the increased health risks associated with smoking. Statistics [1] show that smokers are more prone to developing a range of health issues, including respiratory diseases, heart problems, and various cancers. These elevated health risks pose a greater likelihood of insurance claims being made, which prompts insurance companies to charge higher premiums for smokers.

Conversely, non-smokers generally benefit from lower premium rates because they are statistically less likely to develop smoking-related health conditions. Insurance companies perceive non-smokers as posing lower health risks, thus offering them more favourable pricing for term insurance policies. This pricing discrepancy reflects the differing levels of risk associated with smoking status, with smokers bearing higher premiums to offset the anticipated costs of potential health-related claims. What If I Lied To An Insurer About My Smoking? Sometimes, smokers may refrain from disclosing their smoking status to insurance applications due to higher premiums. However, it is possible for insurers to identify smokers who claim to be non-smokers during the underwriting process. And, this may result in your application being rejected. So, no matter how hard you try to hide it, the truth will eventually come to light.

Additionally, life insurers conduct pre-issuance verification calls in which applicants are once again asked about smoking. Such conversations provide the opportunity to ask contextual questions, which can help identify individuals who are intentionally trying to hide their smoking habit.

Moreover, a life insurance company can call a policy in question within three years after it has been issued, even without a claim. If you are honest about your smoking habits from the beginning, there won’t be any issues for you or your family.

Wrapping up!

Smoking is injurious to health - as everyone knows. But did you know that the premiums for smokers are higher than for non-smokers, and the terms of their policies differ according to their health status? But, no matter what lifestyle you lead, whether you are a smoker or a non-smoker, it is important to purchase a suitable term life insurance plan that ensures your family's future is not compromised - in your absence.

So, compare and find the best term insurance at the best premium possible and make sure that your family is adequately covered. You never know what the future holds for you. And, that's why you need to secure your family's financial future in case of unforeseen events.

Source https://www.cdc.gov/tobacco/data_statistics/fact_sheets/health_effects/effects_cig_smoking/index.htm#:~:text=Smoking%20causes%20about%2090%25%20^[1]