- Cost of buying cigarettes can be substantial in long term
- For smokers, cost of insurance is higher compared to non-smokers
- A health insurer can even deny service to heavy smoker, says an expert
Suppose, a 25-year-old smokes 10 cigarettes of Rs 13 each a day. This costs him/her Rs 130 per day and Rs 3,900 per month. If we assume that the price of cigarettes will increase at the rate of 10 per cent, the person would have smoked cigarettes worth Rs 1.27 crore by the time he/she turns 60.
This is the absolute cost. The opportunity cost is much higher. Opportunity cost is the return that a smoker will forgo by not investing this money.
If a person aged 25 would have invested Rs 3,900 per month and increased the same by 10 per cent every year, he or she could have accumulated a corpus of Rs 3.37 crore for retirement at the age of 60. This is based on the assumption that the person would have invested the money in an instrument that would have given a return of 8 per cent over long-term.
"Depending on age and the insurance company, term life insurance premiums can be 40 per cent to 60 per cent higher for smokers than for non-smokers," says Mahavir Chopra, director of Health, Life and Strategic Initiatives at Coverfox.com. "The higher risk is reflected in the premium charged by insurers."
As far as health insurer is concerned, the insurer can also deny giving health insurance if a person is heavy smoker, he added.