Term Insurance for Smokers: Explained

A term insurance plan helps you provide financial protection to your loved ones in the event of your absence. The policyholder is expected to pay premiums on a regular basis in return for this protection. The premium for a term plan differs from policyholder to policyholder because it is calculated after taking several subjective factors into consideration. One of the most important determinants of term insurance premiums is the smoking habits of the policyholder. If the policyholder is a smoker, it has a direct impact on the term insurance policy. Let’s see why and how this is so.

Why does smoking affect term life insurance?

It is a well-researched fact that the act of smoking has adverse effects on the health of an individual. The most common notion is that smoking increases the risk of cancer. However, smoking also negatively impacts your respiratory functions, heart health, and puts you at risk for diseases such as diabetes, stroke, asthma, and so on. This, in turn, means that a smoker has more risks to their life and health than a non-smoker. Hence term insurance works a bit differently for smokers – because the insurer is bearing a higher amount of risk in this situation.

A lot of people harbour the belief that smokers cannot get life insurance coverage at all. This is not true. Term plans do incorporate smokers as well, albeit with some changes in the policy conditions.

How does term insurance work for smokers?

The biggest change (and, in many cases, the only change) is that the individual has to pay a higher premium. Insurance companies usually have a chart which outline the different premium rates for each age group. Your approximate premium will be as per your age as mentioned in the chart. There is one separate column in such charts which outline the premium for smokers in different age groups. The premium rates in the smokers’ column would be considerably higher for most insurance companies.

Even when you are using the term insurance premium calculator, you will be asked whether you are a smoker. If the answer is yes, the AI tool provides a relatively high estimate.

However, this does not mean that you hide your smoking habit from the insurer to get a lower premium quote. The repercussions of concealing such vital information can be quite heavy. If and when the insurer finds out about your smoking habits, they may nullify your policy coverage instantly. If a claim has been raised, it will be immediately rejected.

How to lower term insurance premiums for smokers

• Buy term insurance early

Apart from smoking, one of the major factors that affect term insurance premiums is the age of the policyholder. Age also brings with a host of health issues and increased vulnerability to diseases. Therefore, when buying term insurance for smokers, it is advised to buy it early. The premium for a 25-year old who smokes may be higher than that of a 25-year old who does not smoke but it would be lower than that of a 40-year old smoker.

• Use the term insurance premium calculator

The premium calculator is an online tool that helps you get an estimate of the premium based on the information you have provided. This tool is free to use and can be accessed through the insurer’s website. The best part about using the term insurance premium calculator is that you can modify the information you add as many times as you want until you reach a premium estimate that suits your budget.

This helps you understand the aspects that you may have to cut short to be within your budget.

Does quitting smoking help with life insurance?

If you have decided to quit smoking, then it means good news not only for your health but also for your life insurance coverage. Usually, insurers expect the individual to be off nicotine products for a minimum of 12 to 18 months before classifying them as a non-smoker and applying lower premium rates. However, the negative effects of smoking can be lifelong and may continue to affect your premium even after you have quit. It is best to consult with your insurance provider about this aspect before making any major decisions.

The benefits of term insurance are many and you should not deprive yourself of them regardless of whether you smoke or not. Be honest with your term insurance provider and ensure to use the right tools when buying life coverage.