MANAGEMENT

Detailed explanation-1: -Compared to a non-smoker, the premium for a smoker is higher due to the risk involved in covering the person. Insurers consider smoking injurious to health and could lead to lung infections, cancer and other critical illnesses. This, in turn, leads to higher claims which prompt loading to the premium.

Detailed explanation-2: -Nicotine traces can be found in the saliva, hair, urine, and blood. The insurance companies have the authority to investigate your smoking habits. Your medical records (urine and blood tests) will reveal your smoking habits.

Detailed explanation-3: -Per-mille means ‘for every one thousand dollars’ of your cover. Here’s an example of how a per-mille loading might work: $100, 000 of cover + a $10 per-mille loading = An additional $1, 000 to pay each year, over and above the company’s standard premium rate.

Detailed explanation-4: -You can opt to continue with your plan as is or after quitting for a few years, you can re-apply for a new term plan as a non-smoker. If you choose the second option, you must be honest about your smoking habits in the past and accurately state for how long you’ve been tobacco-free.

Detailed explanation-5: -So what is loading in an insurance policy? Loading is an additional amount that is built into the insurance cost. This amount is added to the premium to provide the cover for a ‘risky’ individual.