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How Does Smoking Impact Health Insurance Premium?

Author: Team Finpage
Smoking is a serious concern in India and its ill effects on health are well-known.
Friday, May 10, 2024

In 2021, a study by the World Health Organisation reported that India lost 1% of its GDP to diseases and early deaths, mostly attributed to tobacco use. This clearly establishes how smoking and insurance premiums have an impact in terms of coverage and risk. The impact of smoking on life insurance rates is significant due to the evident health risks associated with tobacco use. In this article, we decode the link between smoking and health insurance premiums in India, with easy-to-understand insights.

What is the Link Between Smoking and Insurance Premiums in India?

Smoking is a serious concern in India and its ill effects on health are well-known. Smoking paves the way for many critical illnesses including heart disease, illnesses that affect the lungs, cancer, stroke and even causes untimely death. For the same reason, a smoker has a higher risk factor for an insurance company, directly impacting the premiums of the policyholder.

What Type of Questions Insurers Will Ask To Determine Smoking?

Insurance companies define an individual as a smoker who takes tobacco in any form like bidi, cigarettes, cigars, snuffs or chewing tobacco. The risk factor is considered high for health insurers as compared to non-smokers because they are more likely to make a claim.

Typically, insurers will ask a set of questions like ‘Did you smoke in the last 6 months?’ and ‘Do you smoke occasionally or regularly?’. If answered as ‘Yes’, then it is confirmed as a smoker. It is essential to be honest while replying to these questions. Insurers also conduct a medical test to examine the tobacco traces in the blood of the applicant to check their health condition.

Why Smokers Are Asked To Pay High Premiums ?

Insurers evaluate the risk factor linked with smoking. Since a smoker is considered prone to several chronic ailments, insurance companies offer higher premiums to them than in normal cases. This high premium is generally charged to compensate for the increased risk profile.

The exact increase in health insurance premiums for smokers depends on various factors including type of policy and tobacco, amount of tobacco use and age of the policyholder. Also, the increased premiums vary from insurer to insurer.

What If You Smoke After Getting Insurance?

After applying for an insurance plan as a non-smoker, if the insured person starts smoking, then this results in his/her increased risk. A good practice would be for the policyholder to inform the insurance company everything about his/her smoking habits and the insurer will re-evaluate the premium based on his health. Any concealment or mis-statement of facts while taking a policy could result in dire consequences in case a claim is raised later.

Smoking undeniably has a substantial effect on your life as well as your insurance premiums. However, quitting smoking can lead to potential premium reductions and it is a smart way to prioritise health and avail affordable life insurance coverage.

Team Finpage

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