It would hardly be an exaggeration if one changes the statutory warning from “Cigarette smoking is injurious to health” to “Cigarette smoking is injurious to both health and pocket”. The cost of a stick of cigarette may be small but it extracts a heavy price on the pocket of an individual (the toll on health has been amply discussed all over the world).
It must be noted that insurers have no especial quarrel with the cigarette. From smoking cigarettes to chewing tobacco, smoking cigars to hookahs and bidis – consumption of nicotine leads all insurance companies to extract a higher premium from policyholders compared to those who do not indulge in these practices.
Risks of respiratory, cardiac diseases
“All over the world the consumption of tobacco has been linked to elevated risk of critical diseases of the respiratory system and cardiac system. Therefore, the insurance industry brackets smokers as higher-risk cases,” Tapas Biswas, Executive Life Planner, TATA AIA told News9live.
Here is a difference in annual premiums that a smoker and a non-smoker have to pay. The following case is of a 25-year-old male who wants to buy a term insurance policy of Rs 1 crore. Major private sector insurance firm TATA AIA would charge Rs 9,048 from a non-smoker as annual premium for the first year.
This amount is exclusive of taxes. If GST is added to it, the premium stands at Rs 16,328 in the first year and it rises to Rs 17,187 in the second year.
Elevated premium
Now consider a smoker of the same age seeking the same coverage. The premium will jump to Rs 14,565, before the addition of taxes. After GST is added, the annual premium would amount to Rs 16,328 in the first year and Rs 17,187 in the second year.
Therefore, the premium that is payable by a smoker is – hold your breath – 61% higher than that paid by a non-smoker. It is easy to understand what the additional amount that a smoker has to pay in the form of premiums during the tenure of the policy. Another point to remember is that even if one smokes occasionally, the insurer will consider an individual as a smoker and charge higher premia.
All insurance companies perceive smokers as belonging to the higher-risk categories and, therefore, extract higher premiums from them. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
