What If I Start Smoking After Taking Term Insurance In India

Picture this: You've purchased a term insurance policy to secure your family’s financial future when you are gone. But then, you picked up a habit of smoking.  

Now, you are probably asking yourself: 

What happens to the term insurance policy? Will the coverage be adjusted? Will there be an issue because of me smoking? Will the payment be made to my family after I am gone?

It's a valid concern, and you're not alone in asking these questions.  

In this blog, we will look at how term insurance policies are affected by the changes in one's smoking habits, why it's best to tell the truth, and what steps should be taken after that. 

Let's jump right in and see what the right thing to do is!

Smoking and Its Impact on Term Insurance

Be it policy premiums or coverage options, being a smoker can significantly affect your term insurance policy. Here's a closer look at how your smoking habits can affect claim and renewal or buying additional riders –

Impact of Smoking on Claims

Individuals who smoke are more prone to health issues, which leads them to file claims, thus making smoking a risk factor in insurance claims. Diseases such as lung cancer, heart ailments and other chronic diseases can cut one's life short or cause severe health complications in the advanced years. 

Insurers, therefore, classify smokers as 'higher-risk' individuals and, hence, charge  50%-80% more premiums than non-smokers. For instance, the yearly premiums of the HDFC Click 2 Protect Term Insurance plan for non-smokers and smokers will be ₹16,698 and ₹33,396, respectively, which is a 50% difference. 

This extra cost shields the insurance companies from losses incurred during payment of claims that are statistically more frequent for smokers.

Impact on Policy Renewal or Buying Additional Riders

Smokers may face challenges in renewals of their term insurance policies or when adding new riders to the existing plan –

• Higher Premiums & Limited Coverage:

• As already stated above, smokers are charged higher premiums when renewing their term insurance policies. Because there are high chances of insurance being claimed, they are provided limited coverage. 

• Medical Re-evaluation:

• During the term insurance policy renewal process, insurance companies may require a new medical examination to reassess the policyholder's health status. If the health has significantly deteriorated, the insurer might not renew the policy. 

• Challenges in Adding Riders/Add-ons:
• Adding riders such as critical illness coverage or accidental death benefits can be complicated for smokers. Some might exclude smoking-related conditions or have longer waiting periods before the benefits can be used.
• Riders added to a risk profile generally face potential denial of coverage or higher premiums.

Who is Considered a Smoker Under A Term Insurance Policy?

In the process of purchasing a term insurance plan online, the insurer will have certain queries to help them assess if you are a smoker or not. Major queries include: 

1. Do you use nicotine and/or tobacco in any form?
2. Within the last five years, have you used a tobacco product?
3. Have you, on any occasion, used a tobacco product?

If you answer "Yes" to any of these questions, the insurance company will consider you as a smoker.

Smokers under life insurance are further classified into the following categories:

• Preferred Smoker: This includes smokers who use tobacco products infrequently or occasionally and are in good health. As a result, they usually pay lower premiums compared to other smoker categories. 
• Typical Smoker: This category comprises smokers with certain minor health complications. They are typically charged higher premiums than preferred smokers.
• Table-Rated Smoker: This includes smokers with apparent health complications. Insurance companies typically factor in the greater risk and charge higher premiums.

Note: 

• You will be considered a smoker if you use any form of tobacco – cigarettes, vapes, beedis, cigars, gutka, or pan masala. 
• If you are trying to quit smoking and taking the aid of nicotine patches or chewing gum, you'll also be classified as a smoker. 
• Smoking marijuana products also classifies you as a smoker. 

What if I Start Smoking Later?

Term insurance plans are typically long-term commitments. You may find yourself in a situation where you didn't smoke when purchasing your policy but later developed the habit. So,

What should you do if you start smoking after buying term insurance?

It's important to understand that in life insurance, all crucial information must be revealed at the point of application. If there's a change in your smoking habits after purchasing the plan, the insurance company must be informed. 

This disclosure is important to protect you from any smoking-related complications that may surface and give rise to a claim. Depending on the policy of the insurer, they may decide to keep the coverage the same or increase the premium accordingly.

In addition, in the event that your term insurance lapses and you choose to reinstate it, you will have to reveal your smoking status. Insurance companies expect that you will keep them informed if there is any change in your situation during the currency of the policy. 

Therefore, if you were a non-smoker when you availed of the term plan but a smoker at the time of renewal, then remember to update the smoking status with the insurance provider. This way, you ensure that you are insured without any unpleasant surprises later on.

What Happens if I Quit Smoking under a Term Insurance Policy? 

It is natural to think about how your term insurance policy will be influenced if you quit smoking after buying a term insurance plan. Here's the trust: in most cases, insurers do not allow you to update the information. Therefore, even when you stop smoking, the existing premium will likely remain unchanged. 

However, you have a couple of options. Either stick with the current policy or quit smoking for at least 12 months, to get back in the non-smoker category and seek an equivalent non-smoker term plan with another insurance provider. You might not be charged a higher premium due to smoking habits. 

Nevertheless, as you are older now, remember that you will be charged higher premiums due to the age factor! 

What if I Lied About My Smoking Habits?

Telling lies regarding your smoking habits when applying for insurance can have serious consequences. Insurers usually carry out thorough verification, which includes questions about tobacco habits for the past twelve months and medical certificates. Also, medical tests can easily find traces of nicotine, thus making it hard to cover up the truth.

Attempting to mislead the insurance company is an act of bad faith. If they catch you lying before the policy approval, your application will likely be rejected.

In case your application is approved and the insurer uncovers your smoking habits later, what will happen? In such circumstances: 

1. Fraud Charges: If the insurance company finds out about your dishonesty after the policy has matured, you may be charged with fraud.
2. Nullification of Policy: If they find out about the misrepresentation while processing the application, your policy will cease, which means you will not receive any benefits or coverage.

Furthermore, insurance companies are allowed to refuse payment on death claims arising from false declarations within the first three years of the policy. After that, they can only directly accept your claim due to any misleading information, but getting the claim approved might turn into a long, frustrating process.

Parting Words!

To put it in simpler terms, a change in smoking habits after buying your term life insurance policy does not have to ruin your policy necessarily. Just ensure that you notify your insurer about any changes in your behaviour. This will help avoid any unexpected consequences later. 

After all, you want to protect your family, and transparency is key!

Frequently Asked Questions

Ques 1. What to do if I start smoking after buying term life insurance?

Ans. If you start smoking after the purchase of a term insurance policy, it is righteous to inform the concerned insurer, as this will save a lot of hassle over claims or even policy renewals.

Ques 2. Will my premium increase if my status changes to that of a smoker? 

Ans. Generally, your premium will wait to change; however, once you decide to renew the policy, the company may change its rates because of your changed smoking status.

Ques 3. How do insurance companies categorise smokers? 

Ans. Insurance providers place smokers in groups such as preferred smokers, typical smokers, and table-rated smokers as per their health and risk factors associations.

Ques 4. What happens if I don't inform the insurer about my smoking habit? 

Ans. If you do not inform them about your smoking habits, it may result in the nullification of your coverage and refusal of any benefits.

Ques 5. Can I change my smoking status back to a non-smoker in case I quit? 

Ans. Most insurers do not accept the status change from smoker to non-smoker for an ongoing policy, but it is possible to take a new policy after being away from the use of tobacco for some time.