So the picture of a black lung on the cigarette pack couldn't do it--you still crave for a nicotine fix every few hours. But did you know that smoking costs you over Rs 10,000 a year? This is the extra tagged on to the life insurance premium of smokers. Insurance companies know that nicotine addicts have higher chances of contracting pulmonary and heart-related diseases.
So it makes business sense to charge more for the high risk. For instance, a 40-year-old smoker has to shell out about Rs 25,672 a year for Rs 50 lakh cover under the Kotak Preferred Term Plan. The annual premium for non smokers is just Rs 15,001.
“Tobacco users are at greater risk of heart disease, stroke and various cancers. We recognize this in our rates,” says Andrew Cartwright, chief Actuary, Kotak Mahindra Life Insurance. Adds Madhivanan B. Executive Director, ICICI Prudential Life, “We want to provide incentives to people leading a healthy life, since we expect lower risk and better experience from this group.”
Online term insurance plans also distinguish between high and low-risk customers. “We divide customers into three categories --smokers, non smokers and preferred non smokers. A preferred non-smoker is one who is in a superior state of health than a non-smoker. He is charged 15% lower rates than non smokers,” says Manik Nangia, Corporate Vice-President, Product Management, Max New York Life Insurance.
So if future health problems don't motivate you, think about the current and future cost of smoking. May be it will help you kick the butt.