I have applied for a night-shift post. There was an option for day-shift in the same company. I choose the night shift because I have insomnia and I sleep late.
If my interviewer ask me why I want to join the night-shift instead of day shift, should I tell them about my sleeping habit as I have stated above?
If not, what should I say instead?
Insomnia is a medical condition. In many places, medical conditions which do not require special care from the employer are a taboo topic in job interviews. Even in those where the law does not forbid questions about medical conditions, you are better off not mentioning them.
If the question comes up (most companies have trouble filling the night-shift positions and are glad for anyone they can get), just say:
I am a night person
Some people simply have an atypical circadian rhythm which makes them sleepy during the day and active at night (some people call this a disorder, which I find discriminating). Those people are perfect for night-shift jobs.
(This often gets misdiagnosed as insomnia, by the way. Insomnia is when you can not sleep well at all. But people with atypical circadian rhythms can sleep perfectly fine when allowed to follow their natural sleeping pattern. It only looks like insomnia when they are forced to wake up early every morning).
Another concern you might want to diffuse is that you don't have a day-job. Some people are so hard on cash that they need both a full-time job during the day and a second job at night. Those people often have trouble getting enough work-life balance to do either job properly.
They may or may not ask that question.. if they do however I probably wouldn't get into the specifics of your insomnia but would instead say something about you being a "night owl" (someone who is generally more productive/awake late at night) rather than a "lark" (someone who is at their best first thing in the morning) and leave it at that.
I spent nearly two years on the night shift before moving into a dayside job with the same company. When I was interviewed, the questions focused more on if I understood how hard the night shift can be, rather than why I wanted to work at night. I doubt that your interviewer cares if you have insomnia. Say something honest, like "I'm more productive when I work at night" and leave it at that.
Caveat sopitas
I want to warn you that that night shift and insomnia aren't necessarily a good match. When I was on the night shift, I had to convince my body that it was time to sleep, regardless of the amount of sunlight or if there was a jackhammer tearing apart the sidewalk outside. If you have trouble sleeping now, working nights and sleeping days might make it even harder to sleep. (This may not apply if you have an atypical circadian rhythm, as described by Philipp.)
