- If you consider yourself a smoker, life insurance may be a worthwhile investment.
However, smokers are likely to notice that, when they do take out policies, their premiums are significantly higher than those who don’t smoke.
So, to prepare you for potential costs ahead, let’s investigate the insurance process and associated costs for a smoker.
When you apply for life insurance, the insurer will ask you a series of questions. They will use some of these questions to determine if you are classified a smoker or not.
Now, you might be thinking: “Oh, I only smoke when I drink. I’m more of a social smoker.” Or, “I actually quit 3 months ago! Now I just use the patch!”
As far as your insurer is concerned, these statements do not place you in the non-smoker category. Your smoker status depends on one thing: whether you use cigarettes or not. Insurers consider both the occasional smoker and recent non-smoker as smokers.
You are considered a ‘smoker’ by life insurers if you’ve smoked cigarettes or other nicotine/tobacco products, used any nicotine replacement products, smokeless tobacco, or any other nicotine product in the last 12 months.
So, if you used any of the the following items even once in the last year, an insurance company will likely classify you as a smoker:
- Chewing tobacco
- Nicotine patch
- Nicotine gum
By definition, insurance companies don’t differentiate between those who smoke a pack day and those who are using the patch and trying to quit. To not be considered a non-smoker, you must be completely tobacco/nicotine-free for an entire year.
However, the insurance company will likely try to determine your health risk by assessing the details of your smoking habits.
They may ask the following types of questions:
- How often do you smoke?
- How long have you been smoking
- If you recently quit, when was your last cigarette?
Health funds can use this more detailed and nuanced information to determine your perceived health risk. I.e. the likelihood of you making a claim. This perceived risk will determine your premium.
It’s important to be honest about your smoking status, as many insurers require a supplemental medical examination to confirm your policy or claim. If you’re found to be lying, your claim will likely be denied and you could be accused of insurance fraud.
Insurance fraud is a serious offense with maximum penalties ranging up to 10 years imprisonment, substantial fines, or both depending on the exact charge and state or territory—don’t risk it.
Once the insurer determines that you fall in their definition of “smoker,” they will likely assess a higher premium rate. Depending on where you live, you should expect to pay 2 to 3 times more than a non-smoker.
And while your rate will certainly be higher than a non-smoker, there are measures you can take to decrease your premium.
- Quit Smoking – Even though you’ll still be considered a smoker if you’ve had a cigarette in the last year, you will likely be considered a lower risk if you recently stopped smoking or slowed down a great bit.
- Quit drinking – If you are a drinker and a smoker, your premium is likely to be even higher. Quit or slow down on drinking, and you may see some savings.
- Lose weight – If you are considered overweight or obese, getting in better shape could have you save money on life insurance even if you are a smoker. In fact, eating healthier and exercising more could also help you beat your smoking habit for good! Double win!
- Policy and company comparisons –Make sure that you evaluate the level of coverage you really need and compare between companies based on that policy level. With adequate analysis and comparison, you are likely to find an adequate policy at a lower rate.
And, make sure to keep your insurer updated on your smoking status. After you have been nicotine free for 12 months, you will likely qualify for drastically reduced rates!