Can Quitting Smoking Affect Your Term Plan? Find Out Now
Term insurance, as we all know, is something that is indispensable in the current scenario. After all, it is a term plan that financially safeguards the future of your family/dependents in case of your unexpected and sudden demise within the policy tenure. It achieves this with the payout of the sum assured to your nominees and dependents, enabling them to meet future living costs, take care of higher education and other goals, and clear off any debts you may have left behind.Thank you for reading this post, don't forget to subscribe!
While the importance of a term plan is undisputed, what about your smoking status? This question matters since smokers have to disclose this information while purchasing their term insurance policies and may have to pay higher premiums as compared to their non-smoker peers in the same age group. Now, what happens if you quit smoking? Conversely, what about a scenario where you start smoking after buying your term plan? Does it have any impact on the same? Here’s looking at all the possibilities in this regard.
If you have a term insurance plan in your portfolio and take up smoking later on, you are not necessarily required to inform the insurance company about it. Yet, it is best to stay honest in order to avoid future issues. There could be a delay in the claim procedure till the company finishes its due diligence and verification procedures on suspicion of the policyholder defrauding it by concealing information. This may lead to a difficult time for your family in such a tragic situation.
Informing the insurance company means you may get permission to continue the policy, while the premium could increase. You can utilise a term insurance calculator to work out the additional amount. The premium increase is not guaranteed and may depend on your specific circumstances. Insurers usually have certain categories for smokers with regard to working out their premium amounts. These include the following:
- Preferred Smokers- Those who are fit, smoke, and do not have any accompanying health problems. Their premiums may be similar to non-smokers in many cases.
- Typical Smokers- These people have minor health problems and must pay higher premiums to cover higher risks
- Table-Rated Smokers- People with more acute and visible health problems have to pay considerably higher premiums to offset their risks
If you begin smoking after buying a term insurance policy, then you may get a rider added to the policy for coverage of the additional risk by paying an additional premium amount.
If you start the consumption of alcohol after purchasing a term plan, it will usually not impact your life coverage. You may inform the insurer about the same, and it will mean that alcohol consumption within globally-prescribed limits may not affect your coverage or premium amount.
Your insurance company may sometimes ask for a medical test. If you are found to be fit, the coverage will continue with the same premium. Yet, if you have a drinking problem and significant health issues, then it may affect overall coverage and lead to policy termination.
If you quit smoking after purchasing your term insurance plan, it will usually not impact the policy. Most insurance companies do not allow any change in your smoking status to non-smoking from smoking. You can choose to continue with this term insurance plan, or after you have successfully kicked the butt, you may apply as a non-smoker for a new policy if you stand to get a better premium.
Since you will be older now than when you bought the earlier policy, the premium benefit for a non-smoker may not be there while purchasing a fresh policy or negligible at best. See whether your insurance company allows you to reconsider the policy if you have not consumed tobacco over at least a few years. Your insurer may verify the same and lower your premiums accordingly.
You should remember that smoking and liquor consumption will always impact term insurance plans. Drinkers and smokers usually pay higher premium amounts than their non-smoking and non-drinking counterparts since they have higher risks of diseases and health hazards. Some insurance companies may also do away with coverage for specific ailments/medical conditions linked to drinking or smoking. Death benefits of a policy may also come down due to death by drinking or smoking in the case of the policyholder. You should thus declare all lifestyle habits and health issues while buying term insurance, including smoking and drinking habits.
Be honest about these aspects, and there will be a lower chance of claim rejection for your dependents in case of your untoward demise within the policy period. Utmost good faith is the principle followed by the insurance company and insured individual in the case of life insurance, requiring both parties to fully disclose all necessary information pertaining to risks. Some insurance companies may allow smoking status changes for term plans, while some may not. Consult your insurance company about this aspect. In some cases, you may also have to take a fresh health check-up for the insurer to verify your claim about your tobacco-free status.