In my previous post How you can achieve Financial Goals by small sacrifices? I wrote in detail about the ways by which how you can create better financial life. Continuation of that, I thought to concentrate on the smoking habit which is the salient killer of your financial life too.
Usually people consider what the actual price they pay for buying as the expense of their smoking habit. But nowadays when you look at any product you are buying, especially when it comes to insurance, smoking actual cost you more than what you spend on this habit.
To clear above point, let us take one example of term insurance where I considered age of a person 30 years old who is looking for Term Insurance of Rs.1 crore and tenure being 30 years. I am taking HDFC Click2Protect example for calculation purpose. Now if we consider the person as non smoker then his yearly premium will be Rs. 11,910 (including tax). If we compare the same data for smoker then the premium will rise to Ra.18, 090. Smoker to non smoker difference of premium per year will be Rs. 6,180. Over the period of 30 years means it will cost you Rs.1,85,400. Suppose you invested this yearly amount of Rs.6,180 in any secured product over 30 years and return on investment around 8%, then the accumulation will be shocking Rs.7,00,000. In the same way it also increases your health insurance premium too, as your probability of becoming ill is more than non smokers.
Now think what will be your saving if you are non smoker? You may save on your dental expenses, medication expenses or health care expense. Surprising is that, studies have also found that smokers earn less than nonsmokers (SOURCE). In future you may also lose some benefits of non smoking in the cases of Auto Insurance and Home Insurance as the risk will be higher than nonsmokers.
I found an interesting calculation called “Cost of Smoking Calculator” on HEREÂ . When I put the data like per day smoking one Packs (Contains 20Â cigarettes) with tenure will be 30 years and found that life will get reduced by 4 years 212 days. I am not authenticating their study, but you may find this effect easily.
Hence habit which costs your health and money is really called a habit? Think and decide. Because it is your life, your money, but the effect will be on your dependents.
Hello sir,
I had bought a term insurance from HDFC life during Feb 2016. I have left smoking from a year but at the time of purchasing the term plan i have mentioned smoker and so the premium also rise. But now I want to cancell it and buy the same from another insurer as a non-smoker.
Is it possible ? please answer.
Jay-If you are sure that you no longer be smoker in future, then you can go ahead for new plan. Before that check the premium and once the new plan allotted, then go for cancellation of the old one.
Thank you sir for your reply, but there is one issue that I have to provide insurance history (previous insurer, type of plan, ….etc) to the new insurer and due to this they will know that in past I have taken a plan with smoker category and now with non-smoker category.
Will this create any obstruction during claim ?
Or I should hide the insurance history from the new insurer ?
Jay-If you decided that you will close the existing one after issue of new policy, then I don’t think mentioning current insurance is required.
thank you very much.
Abhi-Thanks for your never ending encouraging words since my start 🙂 It is coincidence that I thought to ask your view few minutes ago in FB about the changes I did. But now found your message about that . I did these changes to make user friendly. Previous design was bit plain. So thought to change. Thanks once again for your comment 🙂
hearty congratulations Basu for writing posts on such topics..brilliant work done..I also liked the new layout of your blog which is awesome my friend. Keep up the good work!!
Really heartbreaking new!! A smoker must be prudent enough at least for the sake of family. I must admire…:)
Uttam da-Thanks for your comment. Yes what you told about family sake is 100% true.