Smokers die young & pay 55% more on average for term insurance plans

New Delhi: The insurance comparison web portal PolicyX in a report on pricing of term insurance plans said smoking forms a very critical part of the risk premium for term insurance plans.

The data shows that there is a huge difference in risk associated with a smoker vs a non-smoker. On average, a smoker pays 55% extra compared to a non-smoker, the report said. This might very well highlight the importance of habits on the perceived risk of mortality, it added.

On average price trends based on age and gender, It said the premium for 50 lakh sum assured term insurance plan was Rs 14,839 and for a 1 crore sum assured it was Rs. 27,150. These average prices were calculated based on four age bands i.e 25 years, 35 years, 45 years and 55 years and accounting for Male and Female genders. It also considered prices for both smokers and nonsmokers, the report said.

It said the average premiums for a 55-year-old is 85% higher than a 45-year-old, likewise, premiums for a 45-year-old is 70% higher than a 35-year-old while the premium for a 35-year-old is 45% higher than a 25-year-old. The average premium was computed considering both male and female persons and also smokers and nonsmokers.

A non-smoker 25-year-old female pays on an average Rs 5,248 per annum for a 50 lakh cover and Rs 8,636 for a 1 crore cover. As the sum assured is increased, most companies provide a high sum assured discount due to which the premium for a 1 crore sum assured is lower than twice the premium for a 50 lakh sum assured.

According to the report, insurance companies perceive the male insured risk to be higher than females. The average cost of male insured is 21% higher than for female insured for a term plan.  The online insurance aggregator also launched India’s first insurance price Index. The price index will allow users to have a better grasp of insurance prices by observing the segment-wise trends in the premium price, it said in a statement. 

The index will track prices of health insurance and term insurance from leading insurance companies in India and provide analysis and trends through data analytics. The index will be updated on a quarterly basis and provide trends on average insurance prices across segments by age and gender among other factors. 

Source: Times Now News

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