How life insurance premium differs from a smoker to a non-smoker

How a smoker ends up paying high insurance premium than a non-smoker. Have a look at how insurers evaluate their policyholders based on their condition.

Life Insurance
More people die from smoking-related diseases in India than anywhere else in the world except China, says an April 2017 study published in the prestigious British medical journal The Lancet.
The study, titled Global Burden of Disease, says India is second among the top four countries listed in terms of most deaths due to smoking; China leads this quartet, while the US and Russia are the other two, behind India. Incidentally, the study – which spanned 195 countries – showed that these four countries accounted for more than half the deaths worldwide due to smoking.
The report also said that while the rate of growth of smokers was coming down in China and India, their rising populations meant that the sheer volume of smokers in each of these countries was still increasing at an alarming rate. While this is a matter of serious concern for policymakers and health officials, it is little wonder that life insurance companies also take this into account when selling new policies.
Impacting insurance
What this means is that if you are a smoker wishing to opt for a life insurance plan, be prepared to pay a higher premium than what a non-smoker – of the same age and otherwise similar background to yours – would pay at the time of buying similar term insurance. It is not hard to fathom why: mortality rate is higher among smokers than non-smokers.
In other words, life insurance companies impose a more significant premium for smokers given the extra risk they are taking for extending a policy to them. As is apparent from the Lancet report – and WHO studies – death from smoking-related causes in India is quite widespread. This is also why life insurers ask new life plan buyers to tick an empty box on a declaration form in case they are smokers or have smoked during the past 12 months. If you tick ‘yes’, you will most likely be considered to be in the smokers’ category and be subjected to a higher premium.
From an insurance company’s perspective, an applicant will be deemed a smoker if he or she has smoked or chewed tobacco in any form in the recent past; even the use of nicotine patches or gum can qualify one as a smoker. What the insurer essentially looks for is the use of nicotine in any form.
Categories of smokers
Health insurance

Please note that whether you’re a regular smoker or an occasional or ‘social’ smoker, it does not make a difference to the insurer; you will be categorised as a smoker (of whatever degree) unless you have quit the habit for at least 12 consecutive months.

These people typically attract higher insurance premiums due to the higher level of risk involved and should be prepared to shell out 40-100% more for premiums, but this is solely at the discretion of the insurer and can vary between insurance companies. You are advised to seek quotes on an online calculator or from multiple companies to compare the premiums charged for the same coverage amount.
Incidentally, table ratings are not exclusive to smoking; they can be put in place by life insurers for health issues other than smoking, such as diabetes, family history of heart disease, and even obesity. Non-medical conditions could be considered as well, such as an applicant’s criminal record, if any.
Related: How pre existing medical conditions affect your health insurance
Putting it to test
Insurers rely on two sources of information to identify a nicotine user; the first has been discussed earlier: a self-declaration made in the application form. But there’s a second method too: an insurer can conduct medical tests. Typically, medical tests are done when the sum assured that’s applied for falls beyond the permissible non-medical limits, or if there are different rates for smokers and non-smokers. Applicants will be asked to visit one of the network hospitals for a medical examination, though sometimes the test samples may be collected at their home.
Among the various tests that can be conducted, is the cotinine medical rest, which identifies the amount of nicotine the applicant may or may not have consumed in the past three to four days. Cotinine is an alkaloid found in tobacco and is also the predominant metabolite of nicotine; it is used as a biomarker for exposure to tobacco smoke. This test is done using a body sample – most commonly urine or blood, both of which are a regular part of the medical examination for availing insurance.
Sometimes, applicants quit smoking for a week or so, believing this will ‘clear’ their urine and blood of cotinine and thereby bring the premium down. What they probably don’t realise is that the metabolite can remain in body fluids for many days, depending on the number of years the applicant has been smoking.
Better to come clean
Concealing the fact that you’re a smoker or lying about it at the time of application is liable to be considered as insurance fraud. It isn’t a good idea to state wrong facts, as the insurer can revoke a claim on such grounds. For instance, if a life insurance policyholder who has claimed to be a non-smoker were to die because of any smoking-related reasons, the insurer would have legal grounds for rejecting the claims for reimbursement.
Also, there are the tests. Insurers may ask applicants to undergo one if they are suspicious, or it may just be their policy to have all applicants medically examined, and one can always get caught.
Moreover, a person may claim to be a non-smoker when applying but could be smoking on special occasions; in such cases too, the declaration is invalid. Insurers are strict in their definition and will only quote lower non-smoker rates for applicants who have stayed off cigarettes and nicotine-replacement products entirely.
So if you are a smoker, it is best to declare the same in the application completely and truthfully and accept the fact that if you smoke you will have to pay for your indulgence. Or better still, stop smoking completely and make the application after 12 months.
The grey area
Alternatively, an applicant may genuinely be a non-smoker but could take up smoking later. The question is: does he or she need to change the status to that of a smoker, and start paying the extra premium?
This should not be much of an issue; one cannot change the terms of the contract in any life insurance policy. If a person has been issued a plan as a non-smoker, the insurance contract remains valid until the term of the plan. So, at a later stage of life, if the policyholder starts smoking, the existing contract does not become invalid.
The insurer is aware that in some cases a non-smoker may take up smoking after a few years of taking a policy, or the other way round too. It doesn’t matter: as long as the truth has not been concealed, the insurance contract based on whatever has been declared in the proposal form remains valid. Any change can always be updated during the policy renewal, and if this necessitates any upward revision in the premium, that will come into effect from the next cycle.


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