India has the 2nd highest number of tobacco users globally and a majority of it is due to smoking. While smoking is a personal lifestyle choice, it does have a major impact on your insurance premium. In that case, what should be done? Should you hide it? Or, should you disclose it?

In a recent interview with Sharan Hegde, Co-founder and CEO of The 1% Club, Shrehith Karkera, CEO and Founder of Ditto, cleared many doubts regarding term insurance for smokers. Let’s find out what he said. 

Premium cost of term insurance for smokers

If you are a smoker then your premium would be 30-50% higher than a normal non-smoker. So, if term insurance of Rs 1 crore costs Rs 10,000/year in premium for a non-smoker, it will cost anywhere between Rs 13,000-16,000/year for a smoker. 

What if you don’t declare it?

Shrehith shared a very important point which gives immense clarity on term insurance for smokers.

So, let’s say you don’t declare your smoking habit and it doesn’t come in medical test results too, then, yes, you are saved. However, what we need to understand is that when a large amount of Rs 1-2 crore is involved, the insurer will do a thorough investigation to find out even the smallest traces of evidence available.

Companies even look at social media posts and if they find any picture of you smoking or drinking, that will be used to reject your claim.

But why do they take so much pain?

Well, it’s simple. Look at it from a company’s point of view. If they can spend Rs 10 lakh on an investigation and save Rs 1-2 crore, it’s a profitable deal for them.

Also Read: LIC Health Insurance plan may become a reality soon!

Disclosing doesn’t guarantee anything

There is a misconception among a lot of people regarding disclosing their smoking habits. Many believe that “once I disclose it, I won’t have any issues in settlement.” However, that’s not true.

Let’s say you smoke a lot and tomorrow you get lung cancer. Now this is a clear correlation and comes under substance abuse. Therefore, in such cases, the insurance provider can make the case that it is due to your self-destructive habits and contest about denying your claim.

If a claim can be rejected even after declaring then why would anyone do it?

Shrehith explained the importance of declaration in the case of term insurance for smokers through an example:

Let’s say you are a modest drinker and you get a heart attack. Now, during your discharge, if the doctor makes an observation saying that you used to drink, then the insurer can contest the claim even if it’s not related to your habit.

Of course, you can take it to court and fight the case but we already have a lot of pending insurance cases for years so it’s tough to tell as to when your nominees will get the money.

Therefore, it is better to be honest in your declaration so that there are fewer chances of rejection.

Also Read: Life Insurance Awareness: The India Story

What if you take up smoking later?

Once your policy is in effect, the insurer cannot change any premium or clauses based on lifestyle changes. However, as per Shrehith, even if you take up smoking or drinking after getting your policy, you should inform your insurance provider as a good faith measure.

Why so?

Well, he says that if the insurer finds it out at the time of the claim then they might do an extra bit of digging up to see if you have been smoking from before as well. Hence, it’s best to avoid such scenarios.

So, if you want to learn about the insurance industry, disputed claims, ditto insurance and how it was built, check out this podcast here. 

Disclaimer: The above content is for educational purposes only. The 1% News suggests consulting a registered insurance advisor before buying a term or health insurance.