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Insurance companies consider smoking as a definite and persistent risk, hence the term insurance premium for smokers directly increases manifold. The dangers of smoking are clear and proven in medical data from around the world, which is why underwriters raise premiums without much investigation.
New Delhi. You go to buy term insurance and as soon as you mention that you smoke cigarettes, the premium suddenly increases manifold. But when you say that you drink alcohol occasionally, the insurance company does not react that much. Why is there this difference? Are the risks of alcohol less or are insurance companies more sensitive about smoking? The real thing lies in the data and concrete risk formula hidden behind it.
The world of insurance runs entirely on probabilities. The job of the companies is to estimate what is the probability of a claim coming from which customer in which year. In the case of smoking they don’t have to guess. It is clearly written in medical data around the world that smoking is the biggest cause of almost every serious disease. Cancer, heart attack, stroke, lung infection, everything is directly related to smoking. That means the possibility of a smoker’s claim is already confirmed and proven. For this reason underwriters increase the premium without any extra checking.
different story of wine
The story of alcohol is completely different from this. Alcohol causes harm, but the pattern of its harm is not fixed. If a person has one or two drinks a month, the risk is very low. Whereas for someone who drinks alcohol daily or in large quantities, the risks increase manifold. This is why insurance companies consider alcohol an uncertain risk. They don’t increase your premium significantly just knowing that you drink alcohol occasionally. The real evaluation happens when your medical report comes. If liver enzymes are found to be impaired, fatty liver is visible or the effects of alcohol start appearing on the body, then only the premium increases.
This does not happen in smoking. Here the company does not care much about your medical report. The habit of smoking is enough to determine the risk, because its harms are persistent and certain. Therefore, the term plan premium for a smoker becomes many times higher than that of a non-smoker.
The risk of smoking is definite
That means this difference is both scientific and statistical. The risks of smoking are clear, the effects are direct and clearly visible in the data. The risk of alcohol is uncertain, quantity dependent, and different from person to person. For this reason, a puff of cigarette weighs more heavily than a sip of drink while determining the premium.
