Millennials and Gen Z: Want Insurance Problems? Just Add Alcohol and Cigarettes!

Millennials and Gen Z: Alcohol, Cigarettes, and Their Hidden Insurance Costs

In India, alcohol and cigarette consumption among Gen Z and Millennials is on the rise, impacting not only their monthly expenses but also life and health insurance premiums. This article explores the spending habits of young adults on these lifestyle choices, the reasons behind smoking, and how these habits result in higher insurance premiums.

Alcohol and Cigarette Spending Trends:

Young Indians, especially from Gen Z and Millennial age groups, are dedicating significant portions of their budget to alcohol and cigarettes. Here’s a breakdown of their monthly spending:

• Gen Z:
• Alcohol: ₹500–₹2,000 monthly. (Approx.)
• Cigarettes: ₹300–₹1,000 monthly. (Approx.)
• Millennials:
• Alcohol: ₹1,000–₹3,500 monthly. (Approx.)
• Cigarettes: ₹500–₹1,500 monthly. (Approx.)

Alcohol Consumption Trends:

• Lower Consumption Among Gen Z: Gen Z consumes 20% less alcohol than Millennials, reflecting some conscious restraint.
• Alcohol Purchase Patterns: Around 84% of Gen Z adults buy alcohol, compared to 90% of Millennials, indicating a slightly lower inclination toward regular drinking among Gen Z.

Smoking Trends in the Workplace:

• Gen Z: Known for taking unauthorized smoke breaks, Gen Z employees often vape or smoke during work hours, with these breaks adding up to nearly six days of lost productivity annually. Nearly half (46%) would prefer a 20-minute smoke break over continuous work.
• Millennials: Despite high stress levels, Millennials are the least likely to smoke during work hours. However, two-thirds report that professional stress does increase their cigarette intake outside of work.

Smoking at the Workplace: Key Triggers:

In the workplace, smoking among young adults is often linked to coping with high-stress environments. The primary reasons for smoking at work include:

1. Stress
2. Anxiety
3. Irritation
4. Social Atmosphere
5. Out of Habit

Potential Impacts on Insurance Claims:

The increasing rates of smoking and drinking among Gen Z and Millennials bring additional challenges to the insurance landscape:

• Higher Claim Rejections: Lifestyle-related diseases could result in more claim rejections or delays.
• Stricter Underwriting Policies: Insurers may increase scrutiny on applicants with a history of drinking or smoking.
• Increased Premiums: As seen in the premium comparison, the costs for smokers and drinkers are significantly higher, with insurance companies likely to continue raising rates for high-risk applicants.
• Introduction of Wellness Programs: Some insurers may introduce wellness incentives to encourage healthier behaviors and potentially lower risks, providing benefits like reduced premiums for those who demonstrate healthy lifestyles.

Insurance Premiums Comparison for Drinkers and Smokers vs. Non-Drinkers and Non-Smokers:

When it comes to life insurance, non-drinkers and non-smokers benefit from significantly lower premiums. A 25-year-old non-drinker/non-smoker in India might pay an annual premium of around ₹10,000–₹12,000 (Approx.) for a ₹1 crore life insurance policy. In contrast, for individuals who smoke or consume alcohol, insurers typically charge 25-50% more due to the heightened health risks associated with these habits. This results in an annual premium range of approximately ₹12,500–₹18,000 (Approx.), depending on the frequency and intensity of these behaviors.

In addition to life insurance, health insurance policies are also more costly for smokers and drinkers. Insurers may either charge a higher premium or impose stricter conditions, such as exclusions for certain illnesses directly related to these habits. This financial disparity underscores the hidden costs of lifestyle choices, where smoking or drinking can lead to long-term financial burdens beyond just monthly spending.

Conclusion: The Cost of Lifestyle Choices

The financial impact of alcohol and cigarette consumption extends beyond immediate expenses, affecting long-term financial security and access to affordable insurance. For Gen Z and Millennials in India, these habits lead to higher premiums, stricter policy conditions, and even potential claim rejections. Lifestyle choices like smoking and drinking not only deplete monthly budgets but also impose additional financial burdens through increased insurance costs. As insurance providers respond with tighter underwriting criteria and wellness programs, it becomes clear that these habits have far-reaching consequences on financial health.

"Health is wealth"—spend on health today to create wealth tomorrow. For India’s Gen Z and Millennials, smoking and drinking habits drive up insurance costs, strain budgets, and impact financial security. Healthier choices mean lower premiums, more savings, and a stronger financial future.

For more insights, check out our Securities Markets Foundation & IC 45 General Insurance Underwriting courses.

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