No Smoking Day: A look at how this deadly habit burns a hole in your pocket

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We all know that ‘smoking is injurious to health’ or ‘smoking causes cancer’, but what smokers don’t realise is its real cost on financial health. No Smoking Day, observed every year on the second Wednesday of March, makes an attempt to encourage smokers to quit smoking. Money9 delves into the matter and explains to you the real cost of smoking.

Losing out on the benefit of compounding

On an average, if someone as young as 25 years of age smokes 5 sticks of cigarettes per day, he would end up spending more than Rs 46 lakh on smoking by the age of 60, says Suresh Sadagopan, Founder at Ladder7 Financial Advisories.

While on the contrary, if a person invests Rs 2,250 in a mutual fund SIP, he will accumulate over Rs 86 lakh in 35 years even at a modest 10% return rate.

Limited or no health insurance coverage

If you are a smoker, you will pay a higher premium for your health insurance policy. Since health risks are higher for smokers, insurance companies charge a higher premium to mitigate the risks. Smokers fall within the high risk group for diseases like Cancer, respiratory complications and hypertension, among others.

“People who are heavy smokers can be potentially rejected by health insurers, if they have a sub-standard life. They may have to bear without health insurance or limited coverage. They may get group health cover from their employer, but it will be limited and only valid till they are employed,” Sadagopan said.

Not just health insurance, smokers are also charged a higher premium for term insurance. “Life insurance premium is often calculated considering the job profile of the policy seeker. While the life insurance premium for people with high risk job profiles like construction workers and prison officers is quite high, people with low risk job profiles like bankers and software engineers pay a lower premium for life insurance policy. By splitting each industry into smokers and non-smokers in order to assess their respective premiums, a smoker in a relatively low-risk job profile industry will still be paying significantly more each month for life insurance than a non-smoker in a high risk job profile,” says Santosh Agarwal,CBO- Life Insurance, Policybazaar.com.

“While even the highest risk job profiles are still very unlikely to result in death, smoking is the primary reason for a plethora of life-threatening diseases. Smoking tobacco for long has been associated with rising incidents of life threatening diseases like lung cancer, tuberculosis, heart ailments, strokes, bronchitis, infertility, and peptic ulcer,” Agarwal added.