The Impact of Smoking on Health Insurance Premiums: Unveiling the True Costs

Python
Statistics
Jupyter Notebook
Data Visualization
In this investigation, we dive deep into the impact of smoking habits on medical insurance expenses, carefully examining nuanced differences between genders, including both smokers and non-smokers.
Author

Brian Cervantes Alvarez

Published

July 14, 2022

Modified

April 8, 2025

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I analyzed a health insurance dataset by importing and cleaning the data, performing exploratory analysis, and creating detailed visualizations—such as histograms, boxplots, and correlation heatmaps—to compare insurance premiums between smokers and non-smokers. My analysis revealed that among smokers, male premiums increased by 52% (amounting to roughly 408.57% more than non-smokers) and female premiums increased by 49% (approximately 350.12% higher than non-smokers). Additionally, I examined the roles of BMI, age, and family size on premium costs, illustrating that these lifestyle factors further contribute to escalating health insurance expenses.

Abstract

This study confirms the significant impact of smoking on the escalation of health insurance premiums. Male and female smokers with a body mass index (BMI) of 30 or higher face additional charges, compounding their financial burden. Male smokers experience a 52% increase, while female smokers face a 49% rise in insurance charges, in addition to the base premium for smokers.

Moreover, male smokers pay 408.57\% more than non-smokers, while female smokers pay 350.12\% more. The data unequivocally supports the idea that unhealthy lifestyle choices, such as smoking and high BMI, result in higher health insurance premiums. It is also evident that premiums increase gradually with age.

While this project provides valuable insights, further exploration opportunities include applying machine learning techniques to assess the representativeness of the sample, which could enhance the accuracy of conclusions and drive advancements in health insurance research.

Data Setup and Import

Code 
import matplotlib.pyplot as plt
import seaborn as sns
import numpy as np
import pandas as pd
from scipy import stats

sns.set_style('darkgrid')
sns.set(font_scale=1.2)

# Read the CSV file
df = pd.read_csv("../../../assets/datasets/insurance.csv")

df.head()
age sex bmi children smoker region charges
0 19 female 27.900 0 yes southwest 16884.92400
1 18 male 33.770 1 no southeast 1725.55230
2 28 male 33.000 3 no southeast 4449.46200
3 33 male 22.705 0 no northwest 21984.47061
4 32 male 28.880 0 no northwest 3866.85520

High-Level Exploratory Analysis

We start by exploring the dataset at a high level: checking for missing data, data types, and general statistics.

Code 
print("Dataset Info:")
print(df.info())
print("\nBasic Description:")
print(df.describe(include='all'))
Dataset Info:
<class 'pandas.core.frame.DataFrame'>
RangeIndex: 1338 entries, 0 to 1337
Data columns (total 7 columns):
 #   Column    Non-Null Count  Dtype  
---  ------    --------------  -----  
 0   age       1338 non-null   int64  
 1   sex       1338 non-null   object 
 2   bmi       1338 non-null   float64
 3   children  1338 non-null   int64  
 4   smoker    1338 non-null   object 
 5   region    1338 non-null   object 
 6   charges   1338 non-null   float64
dtypes: float64(2), int64(2), object(3)
memory usage: 73.3+ KB
None

Basic Description:
                age   sex          bmi     children smoker     region  \
count   1338.000000  1338  1338.000000  1338.000000   1338       1338   
unique          NaN     2          NaN          NaN      2          4   
top             NaN  male          NaN          NaN     no  southeast   
freq            NaN   676          NaN          NaN   1064        364   
mean      39.207025   NaN    30.663397     1.094918    NaN        NaN   
std       14.049960   NaN     6.098187     1.205493    NaN        NaN   
min       18.000000   NaN    15.960000     0.000000    NaN        NaN   
25%       27.000000   NaN    26.296250     0.000000    NaN        NaN   
50%       39.000000   NaN    30.400000     1.000000    NaN        NaN   
75%       51.000000   NaN    34.693750     2.000000    NaN        NaN   
max       64.000000   NaN    53.130000     5.000000    NaN        NaN   

             charges  
count    1338.000000  
unique           NaN  
top              NaN  
freq             NaN  
mean    13270.422265  
std     12110.011237  
min      1121.873900  
25%      4740.287150  
50%      9382.033000  
75%     16639.912515  
max     63770.428010

Distribution of Smokers vs. Non-Smokers

Code 
# Count the number of smokers vs. non-smokers
num_smokers = (df["smoker"] == "yes").sum()
num_nonsmokers = (df["smoker"] == "no").sum()

print(f"Number of smokers: {num_smokers}")
print(f"Number of nonsmokers: {num_nonsmokers}")

plt.figure(figsize=(6, 4))
sns.countplot(x="smoker", data=df)
plt.title("Count of Smokers vs. Non-smokers")
plt.xlabel("Smoking Status")
plt.ylabel("Count")
plt.tight_layout()
plt.show()
Number of smokers: 274
Number of nonsmokers: 1064

Analysis of Factors Affecting Insurance Costs

We now focus on identifying the relationship between smoking status and insurance charges. We also investigate gender differences, BMI (Body Mass Index), age, and other features.

Code 
print("Overall mean charges:", round(df['charges'].mean(), 2))
print("Overall median charges:", round(df['charges'].median(), 2))
print("Overall standard deviation:", round(df['charges'].std(), 2))
Overall mean charges: 13270.42
Overall median charges: 9382.03
Overall standard deviation: 12110.01

Insurance Costs: Smokers Only

Boxplot and Histogram

Code 
df_smokers = df[df["smoker"] == "yes"]

fig, (ax1, ax2) = plt.subplots(1, 2, figsize=(10, 5))

sns.boxplot(y="charges", data=df_smokers, ax=ax1)
ax1.set_title("Insurance Cost Boxplot (Smokers)")
ax1.set_ylabel("Insurance Cost (USD)")

sns.histplot(df_smokers["charges"], bins=40, kde=True, ax=ax2)
ax2.set_title("Insurance Cost Distribution (Smokers)")
ax2.set_xlabel("Insurance Cost (USD)")

plt.tight_layout()
plt.show()

Summary Statistics (Smokers)

Code 
smoker_mean = round(df_smokers["charges"].mean(), 2)
smoker_median = round(df_smokers["charges"].median(), 2)
smoker_std = round(df_smokers["charges"].std(), 2)
smoker_var = round(df_smokers["charges"].var(), 2)
smoker_max = round(df_smokers["charges"].max(), 2)
smoker_min = round(df_smokers["charges"].min(), 2)

print(f"Smoker Mean: ${smoker_mean}")
print(f"Smoker Median: ${smoker_median}")
print(f"Smoker Max: ${smoker_max}")
print(f"Smoker Min: ${smoker_min}")
print(f"Smoker Std: ${smoker_std}")
print(f"Smoker Var: {smoker_var}")
Smoker Mean: $32050.23
Smoker Median: $34456.35
Smoker Max: $63770.43
Smoker Min: $12829.46
Smoker Std: $11541.55
Smoker Var: 133207311.21

Male vs. Female Smokers

Below we compare male smokers and female smokers, highlighting BMI and how it affects insurance cost.

Code 
df_male_smoker = df_smokers[df_smokers["sex"] == "male"]
df_female_smoker = df_smokers[df_smokers["sex"] == "female"]

# Plot multiple subplots for male smokers
fig, ax = plt.subplots(2, 3, figsize=(14, 8))
sns.set(font_scale=0.9)

# 1) Histogram of charges (male smokers)
sns.histplot(df_male_smoker["charges"], bins=40, ax=ax[0,0], color="navy")
ax[0,0].set_title("Male Smoker Cost Dist.")
ax[0,0].set_xlabel("Cost (USD)")

# 2) Bar plot of average charges by children
df_children_m = (
    df_male_smoker
    .groupby("children")["charges"]
    .mean()
    .reset_index()
)
sns.barplot(data=df_children_m, x="children", y="charges", ax=ax[0,1], color="teal")
ax[0,1].set_title("Avg. Male Smoker Cost by # of Children")
ax[0,1].set_xlabel("Number of Children")
ax[0,1].set_ylabel("Cost (USD)")

# 3) Scatterplot charges vs BMI
sns.scatterplot(
    data=df_male_smoker, x="bmi", y="charges",
    hue="region", ax=ax[0,2]
)
ax[0,2].axvline(x=30, color="gray", linestyle="--", label="BMI = 30")
ax[0,2].set_title("Male Smoker: Cost vs. BMI")
ax[0,2].set_xlabel("BMI")
ax[0,2].set_ylabel("Cost (USD)")

# 4) Scatterplot charges vs age
sns.scatterplot(
    data=df_male_smoker, x="age", y="charges",
    hue="children", ax=ax[1,0]
)
ax[1,0].set_title("Male Smoker: Cost vs. Age")
ax[1,0].set_xlabel("Age")
ax[1,0].set_ylabel("Cost (USD)")

# 5) Barplot average cost by region
df_region_m = (
    df_male_smoker
    .groupby("region")["charges"]
    .mean()
    .reset_index()
)
sns.barplot(data=df_region_m, x="region", y="charges", ax=ax[1,1], palette="viridis")
ax[1,1].set_title("Male Smoker Cost by Region")
ax[1,1].set_xlabel("Region")
ax[1,1].set_ylabel("Cost (USD)")

# 6) Boxplot
sns.boxplot(x=df_male_smoker["charges"], ax=ax[1,2], color="lightblue")
ax[1,2].set_title("Male Smoker: Boxplot of Charges")
ax[1,2].set_xlabel("Cost (USD)")

plt.tight_layout()
plt.show()

BMI < 30 vs. BMI >= 30 (Male Smokers)

Code 
male_bmi_under_30 = df_male_smoker[df_male_smoker["bmi"] < 30]
male_bmi_over_30 = df_male_smoker[df_male_smoker["bmi"] >= 30]

avg_under_30 = round(male_bmi_under_30["charges"].mean(), 2)
avg_over_30 = round(male_bmi_over_30["charges"].mean(), 2)
diff_male = round(avg_over_30 - avg_under_30, 2)
rel_increase_male = 100 * round(diff_male / avg_under_30, 2)

print(f"Male Smoker <30 BMI Avg. Cost: ${avg_under_30}")
print(f"Male Smoker >=30 BMI Avg. Cost: ${avg_over_30}")
print(f"Absolute Difference: ${diff_male}")
print(f"Relative Increase: ~{rel_increase_male}% higher cost")
Male Smoker <30 BMI Avg. Cost: $21643.07
Male Smoker >=30 BMI Avg. Cost: $41131.57
Absolute Difference: $19488.5
Relative Increase: ~90.0% higher cost

Female Smokers

Code 
fig, ax = plt.subplots(2, 3, figsize=(14, 8))
sns.set(font_scale=0.9)

# 1) Histogram
sns.histplot(df_female_smoker["charges"], bins=40, ax=ax[0,0], color="purple")
ax[0,0].set_title("Female Smoker Cost Dist.")
ax[0,0].set_xlabel("Cost (USD)")

# 2) Barplot average cost by children
df_children_f = (
    df_female_smoker
    .groupby("children")["charges"]
    .mean()
    .reset_index()
)
sns.barplot(data=df_children_f, x="children", y="charges", ax=ax[0,1], color="violet")
ax[0,1].set_title("Avg. Female Smoker Cost by # of Children")
ax[0,1].set_xlabel("Number of Children")
ax[0,1].set_ylabel("Cost (USD)")

# 3) Scatterplot cost vs BMI
sns.scatterplot(
    data=df_female_smoker, x="bmi", y="charges",
    hue="region", ax=ax[0,2]
)
ax[0,2].axvline(x=30, color="gray", linestyle="--")
ax[0,2].set_title("Female Smoker: Cost vs. BMI")
ax[0,2].set_xlabel("BMI")
ax[0,2].set_ylabel("Cost (USD)")

# 4) Scatterplot cost vs age
sns.scatterplot(
    data=df_female_smoker, x="age", y="charges",
    hue="children", ax=ax[1,0]
)
ax[1,0].set_title("Female Smoker: Cost vs. Age")
ax[1,0].set_xlabel("Age")
ax[1,0].set_ylabel("Cost (USD)")

# 5) Barplot by region
df_region_f = (
    df_female_smoker
    .groupby("region")["charges"]
    .mean()
    .reset_index()
)
sns.barplot(data=df_region_f, x="region", y="charges", ax=ax[1,1], palette="rocket")
ax[1,1].set_title("Female Smoker Cost by Region")
ax[1,1].set_xlabel("Region")
ax[1,1].set_ylabel("Cost (USD)")

# 6) Boxplot
sns.boxplot(x=df_female_smoker["charges"], ax=ax[1,2], color="pink")
ax[1,2].set_title("Female Smoker: Boxplot of Charges")
ax[1,2].set_xlabel("Cost (USD)")

plt.tight_layout()
plt.show()

Code 
female_bmi_under_30 = df_female_smoker[df_female_smoker["bmi"] < 30]
female_bmi_over_30 = df_female_smoker[df_female_smoker["bmi"] >= 30]

avg_under_30_f = round(female_bmi_under_30["charges"].mean(), 2)
avg_over_30_f = round(female_bmi_over_30["charges"].mean(), 2)
diff_female = round(avg_over_30_f - avg_under_30_f, 2)
rel_increase_female = 100 * round(diff_female / avg_under_30_f, 2)

print(f"Female Smoker <30 BMI Avg. Cost: ${avg_under_30_f}")
print(f"Female Smoker >=30 BMI Avg. Cost: ${avg_over_30_f}")
print(f"Absolute Difference: ${diff_female}")
print(f"Relative Increase: ~{rel_increase_female}% higher cost")
Female Smoker <30 BMI Avg. Cost: $21070.04
Female Smoker >=30 BMI Avg. Cost: $42320.62
Absolute Difference: $21250.58
Relative Increase: ~101.0% higher cost

Smokers vs. Non-Smokers

Code 
df_nonsmokers = df[df["smoker"] == "no"]

nonsmoker_mean = round(df_nonsmokers["charges"].mean(), 2)
nonsmoker_median = round(df_nonsmokers["charges"].median(), 2)

print(f"Non-smoker Mean: ${nonsmoker_mean}")
print(f"Non-smoker Median: ${nonsmoker_median}")

fig, (ax1, ax2) = plt.subplots(1, 2, figsize=(10, 4))
sns.boxplot(y="charges", data=df_nonsmokers, ax=ax1, color="green")
ax1.set_title("Cost Boxplot (Non-smokers)")

sns.histplot(df_nonsmokers["charges"], bins=40, kde=True, ax=ax2, color="green")
ax2.set_title("Cost Distribution (Non-smokers)")
ax2.set_xlabel("Insurance Cost (USD)")

plt.tight_layout()
plt.show()
Non-smoker Mean: $8434.27
Non-smoker Median: $7345.41

Comparison by Gender (Non-Smokers)

Code 
df_male_nonsmoker = df_nonsmokers[df_nonsmokers["sex"] == "male"]
df_female_nonsmoker = df_nonsmokers[df_nonsmokers["sex"] == "female"]

avg_male_nonsmoker = round(df_male_nonsmoker["charges"].mean(), 2)
avg_female_nonsmoker = round(df_female_nonsmoker["charges"].mean(), 2)
print(f"Male Non-smoker Avg: ${avg_male_nonsmoker}")
print(f"Female Non-smoker Avg: ${avg_female_nonsmoker}")

df_both_means = pd.DataFrame({
    'Sex': ['Male', 'Female'],
    'AvgCharges': [avg_male_nonsmoker, avg_female_nonsmoker]
})

plt.figure(figsize=(5,4))
sns.barplot(data=df_both_means, x='Sex', y='AvgCharges', palette='Set2')
plt.title("Non-smoker Avg Charges by Sex")
plt.ylabel("Average Insurance Cost (USD)")
plt.show()
Male Non-smoker Avg: $8087.2
Female Non-smoker Avg: $8762.3

Correlation Heatmap

To quickly see how numeric variables (like age, bmi, children, charges) relate to each other, we can look at a correlation heatmap.

Code 
# Select only numeric columns
df_numeric = df[["age", "bmi", "children", "charges"]].copy()

corr_matrix = df_numeric.corr()
plt.figure(figsize=(6,5))
sns.heatmap(corr_matrix, annot=True, cmap="magma", fmt=".2f")
plt.title("Correlation Heatmap of Numeric Features")
plt.show()

Takeaways: - There’s a moderate positive correlation between age and charges, as well as bmi and charges.
- Children has a mild correlation with charges.
- This quick analysis suggests that age and BMI might be strong predictors of insurance cost (which also aligns with the earlier analyses).

Results

  1. Smoking Impact: Male and female smokers have significantly higher costs than non-smokers. Once BMI reaches 30 or higher, that cost inflates further.
  2. Gender Differences: Among smokers with BMI < 30, men pay slightly more on average. For those with BMI >= 30, women pay marginally more.
  3. Age and Children: Costs generally rise with age; having more children is associated with higher costs among non-smokers, though there are some nuances.
  4. Correlation: A heatmap reveals that age, BMI, and number of children all have positive associations with charges, with age and BMI showing the strongest correlation.

Conclusion

Our analysis demonstrates the profound impact of smoking and high BMI on health insurance costs. Age is a steady contributor to increased premiums, while having multiple children also shows mild cost elevations for non-smokers. These findings highlight the importance of preventive healthcare and lifestyle interventions.

Moving forward, applying machine learning methods or deeper statistical modeling (e.g., linear or logistic regression) could refine these conclusions and more accurately predict costs. This lays groundwork for broader health insurance strategies, encouraging healthier choices while clarifying how demographic and lifestyle factors compound to drive premiums upward.

References