Here’s When Smokers Should NOT Buy Life Insurance

September 10, 2014 by Georgina El Morshdy

image979When you apply for life insurance, one of the questions you’ll be asked is whether or not you’re a smoker.

For life insurance purposes, a smoker is often defined as someone who has used tobacco products in the last 12 months – this includes nicotine patches or gum. This means that for insurance purposes you’re classified as a smoker whether you smoke 40 a day, or you just have the occasional puff on a social night out. Now, the definition of a smoker does change from insurer to insurer – so it’s always best to check with your chosen provider, but this definition is a pretty good guide.

The reason insurers ask if you’re a smoker is simple…

It’s well documented that statistically; smokers have a higher chance of dying and therefore making a claim.

As a result, insurers cover this additional risk by increasing the premium of a smoker – and so they want to know which category you fall into.

I’m a smoker.  Should I take out life insurance?

Of course, the answer is “yes.”

Even if your premiums are higher, it’s still worth getting that all-important peace of mind. It’s still worth ensuring your children’s financial future is secure in the event of your death.

Life insurance is ALWAYS a good idea if you have dependents to look after.

But here’s the interesting thing…

If you’re planning to quit, there may be a case to hold off purchasing life insurance until you’re classified as a non-smoker – that way you can save money.

Let’s take a look at some figures to see the financial impact on your premiums if you quit…

Quit smoking and save thousands

If you’re a non-smoker, your life insurance premiums will be less than a smoker’s.

Take a look at the following quotes…

These prices are for a 33-year-old mum looking for £150,000 life plus critical illness cover over a 25-year fixed-term period (quotes correct as of 4th September 2014).

Non-smoker (per month) Smoker (per month) Difference (£ per month) % Difference
AVIVA £44.30 £70.25 +£25.95 +59%
Zurich £45.25 £72.70 +£27.45 +61%
PruProtect £47.23 £75.19 +£27.96 +59%
Legal & General £49.28 £78.44 +£29.16 +59%

In each of the examples above, you can see a smoker’s premium is typically around 60% higher than a non-smoker.

What’s more, the financial impact of this over the 25-year policy term is sizable.

Taking the cheapest quote (which in this case is AVIVA) over the 25-year term of the policy, a smoker would pay £7,785 MORE THAN a non-smoker.

Just imagine what else you could do with that money…

The exception to the above is PruProtect with its Vitality Scheme. With this scheme, the Pru proactively encourages and rewards people who take strides to improve their health. Therefore, as a PruProtect customer, as one of the many Vitality benefits you can enjoy is free access to Alan Carr’s  Easyway To Stop Smoking programme. As well as saving £250, once you’ve been a non-smoker for 12 months, you’d also qualify for the non-smoker rates. So in this case, it’s not worth waiting. Instead, get your cover and use the Vitality benefits to help you quit.

Can’t I just pretend I’m a non-smoker?

Given the increased premiums that smokers pay, many are tempted to try and “cheat” the system and pretend they don’t smoke. Most insurers take applicants at their word so you may find that you “get away with it”

But, be warned! If you were to die and make a claim, if there is evidence that you were a smoker, you could find your policy will not pay out. Alternatively, insurers may reduce the percentage of your payout based on what your smoker’s premium would have been.

In addition, insurers do carry out spot-checks to weed out secret smokers. What’s more, new tests are being developed, which insurers can use – including this urine test kit. The kit costs just a few pounds, which means if insurers have reason to doubt an applicant, they have access to a relatively inexpensive way to accurately charge people for the life cover they desire.

What do you think?

Do you think it’s fair that smokers pay more? Have you given up smoking to get cheaper life insurance? Please let me know in the comments below.

Disclaimer: You should always take trusted advice before committing to life insurance to ensure that any policies you take out are right for your individual circumstances and are the most suitable for you and your family.
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