The Impact of Lifestyle Choices on Your Term Insurance Premiums

While purchasing term insurance, one key factor determining your premium amount is the insurer’s assessment of your health and lifestyle habits. Some lifestyle choices and behaviours may elevate your risk of mortality. This results in you being classified as a high-risk life to insure and hence being charged higher premiums.

This blog examines how common lifestyle factors like smoking, alcohol consumption, diet, activity levels, adventure sports, etc., can impact your term plan premiums. With insurers like ACKO Insurance using technology to offer customised premiums based on your unique lifestyle profile, you can enjoy lower premiums by making mindful lifestyle choices.

Use of Smoking and Tobacco Increase Term Insurance

Smoking, whether cigarettes, bidis, hookah or other forms, significantly increases term insurance premiums. Smokers pay 30% to 50% higher premiums than non-smokers for the same coverage. This is because smoking elevates long-term health risks like:

• Cancer – Lung, mouth, throat, oesophagus, etc.
• Heart disease
• COPD (chronic bronchitis and emphysema)
• Ulcers and gastrointestinal issues
• Diabetes complications
• Infertility
• Weakened immunity

Insurers consider smokers to have lower life expectancy and, therefore, charge higher premiums to compensate for the increased risk they bear.

 Even if you have recently quit smoking, premiums may remain high for some time since the elevated health risks do not disappear immediately. Once you have abstained from smoking substantially, you can approach your insurer to re-evaluate your premium rates.

Impact of Alcohol Consumption

Drinking alcohol has varying impacts on term insurance premiums:

• Moderate drinking – Consuming 1-2 drinks 2-3 times a week is moderate. This will likely not impact your premiums.
• Heavy drinking – Having 3 drinks daily or frequently exceeding 2 drinks per sitting is high consumption. This will attract higher premiums of 25-50% over non-drinkers.
• Alcohol abuse – The habit of binge drinking and getting intoxicated often may classify you as ‘high risk’ for coverage.

Insurers will ask for the results of liver function tests if you consume alcohol regularly. The occasional social drinker is unlikely to see significant premium spikes. However, heavy and high-risk drinking habits must be disclosed as they denote alcoholism and can heavily penalise your premium.

High BMI and Inactivity Lead to 10-50% Higher Premiums

Term insurance applications require declaring height, weight, and BMI. Those who are overweight, obese, or sedentary may pay higher premiums.

Higher BMI and lack of physical activity are risk factors for myriad diseases:

• Heart problems – heart attack, stroke, hypertension etc.
• Diabetes and accompanying complications
• Joint problems causing mobility issues and arthritis
• High cholesterol
• Depression and anxiety

To benefit from lower premiums, maintain a healthy BMI through a balanced diet and regular exercise. This lowers morbidity and indicates lower insurance risk.

High-Risk Jobs Mean More Premium

Occupations that increase the probability of death or injury lead to increased premiums for term insurance. Jobs considered high-risk include:

• Military, defence and law enforcement
• Firefighters
• Mining
• Oil rig workers
• Construction workers
• Airplane pilots and crew
• Loggers

In case of an untimely death of a breadwinner due to a work-related hazard, the term insurance claim helps replace the lost income for dependents. Hence, insurers charge higher premiums for high-mortality occupations to offset the increased risk they bear.

Adventure Hobbies Also Raise Premiums

Term insurance proposals require you to declare any hazardous hobbies or recreational activities. Sports-increasing mortality risks include:

• Mountaineering
• Bungee jumping
• Paragliding or hang gliding
• Skydiving
• Motorsports like car racing
• Scuba diving
• Rock climbing

Such adrenalin-pumping adventure pursuits elevate your chances of death due to accidents, falls, drowning, etc. Your term insurance premium will be raised to balance out this risk, depending on how frequently you do these activities.

Frequent Foreign Travel to High-Risk Countries

Your term insurance premiums could be affected if your job or lifestyle involves frequent overseas travel to high-risk nations. Countries perceived as high risk due to political unrest, terrorism, war, high crime, etc., are graded travel risks. Business or leisure trips to countries – especially if recurring – lead to up to 15% higher premiums since the probability of demise due to risks like terrorism or kidnapping rises.

Medical History Crucial for Accurate Premiums

Existing or previous medical conditions are crucial in determining your term insurance premiums. Issues like heart disease, hypertension, diabetes, etc., are factored into risk assessment. Term plans often have longer waiting periods or permanent exclusions for pre-existing diseases.

Premiums vary depending on the severity of the health condition. Complete transparency about medical history is essential for accurate premium quotes. Non-disclosure can jeopardise claim settlement later.

Impact of Stress and Mental Health

While not discussed as openly in India, mental health conditions like depression, anxiety, bipolar disorder, etc, do influence term insurance premiums and acceptance. Severe stress, mental illnesses and a history of substance abuse may classify you as high risk due to higher susceptibility to suicidal tendencies, self-harm and reckless behaviour. Seeking timely treatment controlling conditions and full disclosure to your insurer can moderate premium spikes.

Conclusion

Leading a healthy, active and well-balanced lifestyle is the best way to keep your term insurance premiums low. Habits like smoking, alcohol abuse, lack of exercise, etc, should be moderated and disclosed truthfully in your application.