September 22, 2021

How Smokers Can Buy Term Insurance Plans

Jan 25, 2021

term policy is a life insurance plan that offers a considerably large cover at an affordable price. A life insurance plan is an essential investment, especially today when the future seems uncertain, and the inflation rate is continuously rising. Hence, it is high time you consider purchasing a term plan and securing your dependents’ future.

However, before buying such a plan, you must determine whether a specific policy is right for you. Here, we will help you understand how to opt for a term life insurance plan if you are a smoker.

Definition of a smoker according to insurance companies

Tobacco or nicotine is an intoxicating substance that is harmful to your health. If you consume it in forms such as cigarettes, beedi, cigars, khaini, pan masala, gutka, nicotine gum, or nicotine patch, insurers will consider you as a smoker. The insurance will ask you a few questions to ascertain if you belong to the smoker bracket. Some of these queries include:

  • Have you tried a tobacco item in the last four years?

  • Have you consumed a tobacco item anytime in the past?

  • Do you use tobacco or nicotine items currently?

If you answer ‘yes’ to any one of these questions, the insurance company will categorize you as a smoker. It is important to know that insurers will treat you as a smoker even if you smoke occasionally. The frequency is not a determining factor for them; if you have ever tried the substances at any point in life, they will charge you a higher premium. So, you can purchase a life insurance term plan at a reasonable premium only by completely avoiding smoking.

Why smokers have to pay a higher premium

When an insurance provider offers you a life policy, they take a risk on you. This is why every insurer wants to ensure that the policyholder is in good health, which increases the possibility of a longer life. However, if you are a smoker, you have a higher chance of developing lung and heart-related diseases. An ailment like cancer can significantly shorten your life. To tackle this risk, insurance companies require smokers to pay a higher premium compared to non-smokers.

The amount of extra charge varies among insurance providers. On average, the difference between premiums for smokers and non-smokers can be up to INR 2,000. However, this difference also depends on the health and age of the applicant.

Quitting smoking after buying the policy

You may wonder what happens if you purchase a life insurance term plan and then stop smoking. If you have not consumed any nicotine-based product for at least two years, you have the option to request a readjusted premium when renewing the insurance plan. However, the rule differs among insurers. You can contact your insurer and find out if they allow a premium-cut after an existing policyholder quits smoking.

Do not hide if you are a smoker

The nominees of a policyholder receive the sum assured only after making a successful death claim. If the insurer finds out that you lied in your application, they are within their rights to reject your nominees’ policy claim. To avoid this situation, be honest when applying for the policy. Hiding that you are a smoker will put your family at a high risk of not getting the sum assured.

These days, you can buy term insurance online in minutes without much effort. However, it is essential to be extremely careful while applying for the policy online. While filling the form on your insurer’s website, provide all the information accurately and truthfully.

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What Is the Difference between Unsecured Loan and Secured Loan?

Jan 14, 2021

While most of us wish to have a cash-only lifestyle, the truth is that you cannot avoid credit throughout your life. Even the most financially disciplined individuals rely on loans when faced with an unexpected expense or when they want to buy big-ticket items.

 You may be forced to borrow money when you want to purchase a car or house, open/grow your business, pay for college, or cover an unexpected expense.

When considering your credit options, you need to decide between secured and unsecured loan.  Understanding the difference between these two terms can help you make an informed decision which can have a long-term effect on your financial health.

In this post, we discuss the difference between secured and unsecured loans while highlighting the pros and cons of each.

Secured Loan

Secured loans are typically protected by an asset.  Sometimes, the item purchase with the loan such as a car or home serves as the collateral security. In such a case, the lender will hold the logbook or title deed until the loan is paid in full. Other items such as bonds, stocks, and valuables personal property can be used to secure the loan as well.

Secured loans are the most common way to borrow significantly huge amounts of money. In this case, the lender is only willing to lend you huge sums of money on the promise it will be repaid in full and on time. Putting your home or car on the line is a good way of reassuring the lender that you will do all you can to repay the loan amount plus accrued interest on time.

A secured loan means that you are providing security that you will repay the loan amount plus accrued interest.  As such, you enjoy relatively lower interested rates and longer repayment terms.

However, failure to repay the loan on time can be catastrophic. The lender may sell your collateral to recoup the loan amount, causing you to suffer a double loss.

Unsecured Loan

On the contrary, an unsecured loan doesn’t require any collateral though you are still charged relatively higher interest rate and sometimes fees. Personal loans, student loans, credit cards, and a no credit check loan are all perfect examples of unsecured loan.

Since there is no collateral, lenders mostly give out unsecured loans based on your credit score and history of repaying debts. But it isn’t uncommon to come across an online lender offering an unsecured no credit check loan.

You can take out an unsecured loan for almost any purpose. Whether you want to pay for a wedding, finance your holiday, pay off your credit card debt, or renovate your kitchen, an unsecured loan may be the best option for you.

In most cases, an unsecured loan lender will approve your loan request because he/she believes that you have the financial resources to repay the loan on time. Therefore, you will be judged based on your character, capital, capacity, and conditions.

You need to assess all these conditions before applying for an unsecured loan to increase your chances of approval.

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