The Impact of Smoking on Life Insurance Premiums in India
- InCred Wealth March 18, 2024
Smoking is a known risk factor for several life-threatening diseases such as cancer, lung disease, and heart disease. Therefore, smokers are considered higher-risk individuals by insurance companies, and they need to pay a higher premium to get insured. In this article, we will discuss how smoking affects premium payments for life insurance in India.
Smoking and Premium Payments
Life insurance companies in India are within their rights to charge higher premiums from smokers as compared to non-smokers. This is because smokers are at significantly higher risk of developing several life-threatening diseases, which increases the likelihood of the life insurance company needing to pay out the sum assured earlier than expected.
In India, life insurance companies have a system in place that requires policyholders to disclose their smoking habits when buying an insurance policy. This information is then used to determine the risk involved in insuring the individual and calculate the premium payments.
Smoking Habits and Premium Payments
Smoking habits are one of the critical factors that life insurance companies consider when determining policy premiums. If you are a smoker, you are likely to be charged a higher premium as compared to a non-smoker. The difference in premium payments can be significant, depending on how frequently you smoke.
Generally, if you have smoked tobacco within the 12 months preceding the policy purchase, you will be considered a smoker, and the premium payments will reflect this risk. However, some companies may require you to be smoke-free for a more extended period, such as three or five years, before you can be considered a non-smoker and get the corresponding lower rates.
Premium Rates for Smokers in India
As per the regulations of the Insurance Regulatory and Development Authority of India, life insurance companies can charge up to a maximum of 50% more on premiums for smokers than non-smokers. However, this can vary depending on the age, gender, health, and smoking habits of the individual seeking insurance.
For instance, if a non-smoker of age 30 years seeks life insurance, they may receive a monthly premium quote of INR 1,000 for a particular sum assured. However, if a smoker of the same age seeks the same sum assured, they may have to pay INR 1,500 to INR 2,000 per month, depending on their smoking frequency and lifestyle habits.
Conclusion
In conclusion, smoking can significantly impact premium payments for life insurance policies in India. Life insurance companies are well within their rights to charge higher premiums from smokers as they are deemed a higher risk compared to non-smokers. As a result, it is essential for individuals to disclose their smoking habits when buying an insurance policy to avoid any legal implications in the future. Furthermore, for smokers who are trying to quit smoking, it may be worth considering buying life insurance after they have quit smoking for a certain period to receive lower premium rates.