What If a Policyholder Starts Smoking After Buying a Term Plan?

Smoking is a bad habit that can cause lung disease, cancer, heart disease, stroke, etc¹. Moreover, in many cases, the medical complications arising out of smoking might also lead to death. According to WHO (World Health Organisation) data, smoking causes nearly 1.35 million deaths every year in India².

So, if you are a smoker, you present a higher risk to the insurance company as compared to a non- smoker.

 

But who is considered a smoker?

 

In insurance parlance, you are considered a smoker if any of the following points are met, regardless of quantity and frequency of consumption–

• You consume nicotine or tobacco-related products.
• You have consumed nicotine or tobacco-related products anytime in the past. You are considered a smoker even if you smoke occasionally/rarely. Typically, insurers classify you into the following types of smokers based on your smoking habits³ -

 

● Table-rated smokers

Habitual smokers who exhibit smoking-related health hazards.

● Typical smokers

Habitual smokers have minor health hazards due to their smoking habits.

● Preferred smokers

Smokers do not have any health-related complications due to their smoking habits.

 

Smoking and term insurance

 

When buying a term insurance plan, if you smoke, even restrictedly, you need to disclose your habit. As mentioned earlier, the proposal form always asks whether you smoke or not and you need to give a truthful answer to the question. This is because life insurance contracts are contracts of good faith. The insurer trusts your declarations in the proposal form and if you lie about any fact or hide it, the insurance company may, based on the facts submitted, reject your claim if the hidden information is discovered later.

Insurers may conduct a medical test to identify smokers and the premium amount may vary from smokers to non-smokers.

So, if you smoke, you should inform the insurer of the same.

 

Developing a smoking habit after buying term insurance

 

Term insurance plans are, usually, long-term plans. It might happen that when buying the policy, you did not smoke but later you develop the habit. What should you do? Will smoking impact your coverage?

In life insurance plans, you need to disclose all the material information at the time of buying the policy.

It is better to inform the insurer if the smoking habits, change any time after buying the plan. This will keep you in the clear in case of medical complications brought on by smoking that might cause any eventuality. When you inform the insurer, the insurer might continue the coverage unaffected or might even revise the premium, basis the insurer’s terms and conditions.

Also, if your term insurance plan has lapsed and you are reviving it, disclosure of the smoking habit becomes mandatory. In the case of revivals, insurance companies require you to inform them about any facts that have changed throughout the policy. So, after buying the term plan, if you started smoking and then you are reviving the policy, you must inform the insurer of your smoking habits.

 

The bottom line

 

Smoking may prove to be a dangerous habit. However, if you smoke or develop a habit, inform the insurance company from which you are buying your life insurance policy. Non-disclosure might lead to claim-related disputes which are better avoided. So, be a responsible policyholder and uphold the principle of good faith. Inform the insurance company of your smoking habits, whether you have it at the time of buying the policy or at the time of renewal so that the claim settlement is hassle-free.

References

¹https://www.cdc.gov/tobacco/basic_information/health_effects/index.htm

²https://www.who.int/india/health-topics/tobacco

³https://www.bankbazaar.com/term-insurance/term-life-insurance-for-smokers.html

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