Impact of Quitting Smoking on Term Insurance

Although there is no shortage of anti-smoking campaigns across India, and the hazards of this habit are well-documented, it is still increasingly prevalent in society. Along with its negative health impact, it also impacts financially. For example, people who use tobacco have to pay higher premiums for term insurance. If you are one of them, you may wonder what effect quitting smoking has on term insurance. Does it lower the premium, or does it not? This blog will answer all related questions.

Although there is no shortage of anti-smoking campaigns across India, and the hazards...

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What Happens if You Quit Smoking After Buying Term Insurance?

As you, being a smoker, are already charged with a higher premium from the get-go, if you quit smoking after buying term insurance, it will not reduce premium rates. This is because most insurance providers do not permit a change in smoker to non-smoker status. However, you can consult with your insurance provider about this and come to a profitable conclusion.

For example, for a few years, you can stay away from smoking and re-apply as a non-smoker, surrendering the old policy. That is how quitting smoking can impact your term insurance in the near future. However, you should also consider your increased age, which can affect the premiums. Therefore, consulting with your insurer is necessary.

How Can You Save on Your Term Insurance Premium?

Before or after consulting with your insurer, you should know that quitting smoking in term insurance is the most effective way of reducing the premium. Many insurers offer lower rates to non-smokers. Therefore, if you abstain from nicotine or tobacco for a fixed period (for example, around a year), you can benefit from non-smoker rates.

If you’re relatively young, your plan's benefits may outweigh any potential cost increase as you age, making it advantageous overall. That is why one of the best ways to save on your premiums is to apply early. Your young age and healthier body enable you to get the best rates. You can also ask for better terms from the insurer if you start early.
Another time-tested way to save on your premium is to maintain a healthy lifestyle. Your medical history will clearly reflect this, and you will enjoy a lower premium than low-risk customers.
You can also claim a deduction of up to ₹1.5 lakh on your premiums under Section 80C of the Income Tax Act.

How do Life Insurance Providers Classify Smokers?

Life insurance providers have specific criteria for classifying smokers, which goes beyond just cigarette use. Regular use of any form of nicotine or tobacco will result in higher premiums.

Generally speaking, it does not matter how frequently or infrequently you use tobacco or nicotine. The insurance company will classify you as a 'smoker'. Other than cigarette smoking, it also includes nicotine patches/gums, vaping, pipe tobacco, cigars, e-cigarettes, snuff, chewing tobacco, and any product that has its core derived from the tobacco plant.

In the applications insurers provide, you can see the following questions that try to identify smoker status:

Have you used any type of nicotine or tobacco product in the past 12 months?

If so, what product have you used and how frequently?

When did you use nicotine or tobacco products for the last time?

As you know, complete honesty is expected of you when you want to take out insurance plans. Not doing so can lead to claim rejection, inability to access proper coverage during an emergency, and so on.

What Happens if You Hide Your Smoking Habit?

People may assume that by hiding their nicotine or tobacco use from the insurer, they can escape the higher premium rates. It can spare them higher premiums in the short run but also have grave consequences.

For instance, if you hide your smoking habits and meet sudden demise due to related diseases within the term period, the insurer can legally refuse to pay the claim amount. It will defeat the purpose of paying regular premiums. In another instance, if the insurer finds the truth during the policy term and you are still alive, it can file charges against you for fraud. The company can make you pay higher premiums or terminate the plan.

Why Do Smokers Pay More for Term Insurance?

Now that you know how to save on premiums if you are a smoker, you may also like to know what the impact of smoking is on term insurance. Generally, smokers need to pay 1.5 or 2 times higher than non-smokers. Here are a few reasons why insurers make smokers pay more:

Lower Life Expectancy

Every year, 8 million people die due to smoking. 25% of all cancer deaths are also triggered by tobacco use. As tobacco decreases one's expected lifespan, it is a red signal for insurance companies as it leads to increased claim payments. This results in life insurance companies requiring more contributions from smokers to take on the risk exposure.

Increased Health Risk

Lung cancer is the most known cause of death that is related to smoking. However, several other diseases stem from this habit, increasing mortality. These diseases include coronary heart disease, cerebrovascular disease, various types of cancer, and chronic obstructive pulmonary disease (COPD). In insurers' eyes, this makes smokers more of an actuarial liability.

Higher Rates Offset Increased Claims

Statistically, smokers need frequent and earlier death benefit payouts, which necessitates them paying a higher premium. Insurers try to offset the increased claims by making the policies pricier in the term insurance plans for smokers.

The Bottom Line

Quitting smoking in term insurance can positively impact you by making you eligible for lower premium rates and better terms. It may also save you from getting diseases stemming from tobacco use and protect you from considerable financial losses indirectly. Therefore, fighting the temptation of smoking is essential to save your life and enjoy low premiums to ensure the family’s safety.

Frequently Asked Questions

Here is a set of questions and answers people frequently ask about the impact quitting smoking has in term insurance:

If I have a smoking history, will I get smoker-term insurance rates despite being a non-smoker currently?

Generally, insurers will require you to have a medical examination done to assess your smoking status. So, if you stopped smoking a long time ago, you can get non-smoker rates.

How much extra premium is charged for smokers?

It varies from insurer to insurer, but 30% to 100% more payment is common. In addition to your smoking status, other factors such as age, gender, and medical history also impact premium rates.

What if I start smoking after I purchase term insurance?

If you become a smoker after purchasing term insurance, the insurance provider cannot increase your premium as they will not know about this significant lifestyle change. However, this can lead to complications that can negatively affect your family.

If I only smoke occasionally, can I still receive non-smoker term insurance?

It depends on the results of medical screenings that insurers require. If nicotine or its metabolites are in the bloodstream, you must pay higher premiums.

How do you qualify for a non-smoker’s life insurance rates?

If you do not use tobacco products for at least 12 months, there is a high chance you will be treated as a non-smoker. Apart from that, you should also maintain a healthy lifestyle to get a lower premium.