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In insurance, smokers are defined as people who are using nicotine in different forms which include cigarettes, cigars, tobacco chewing, and even nicotine patches. Thus, whether you are a casual or chain smoker, you will still be categorised as a smoker under life insurance standards and guidelines. Specific questions are included to classify you as either a smoker or non-smoker.
One of the most common questions asked during life insurance application process is: "Have you used a tobacco product in the last 12 months?" If the last time you used nicotine has been exactly or over twelve months, then you can be declared as a non-smoker. Anything less than twelve months is not valid. Insurance companies generally don't differentiate between an occasional smoker or a pack-a-day smoker. In the eyes of the insurance companies, the health risks are basically the same, so too are the premium rates.
Of course, if you smoke a pack a day, you may have resulting health issues (e.g. high blood pressure) that can also increase your rates as compared with a non-smoker or occasional smoker.
You should also be aware that even if you declare yourself a non-smoker, an insurance company will still require you to undergo a medical examination to confirm your claim. Although there might be other insurance companies that will take your word for it, this is rarely the case. The example below shows the quote difference for a non-smoker and smoker from one insurance company. Please note that this is only to be viewed as an example and is subject to change based on a wide range of factors.
| Status | Non-Smoker | Smoker |
|---|---|---|
| Age | 35 | 35 |
| State | NSW | NSW |
| Occupation | Accountant (Qualified) | Accountant (Qualified) |
| Cover | $800,000 | $800,000 |
| Premium Per Month | $41.43 | $81.20 |
| Policy | Monthly premium (Non-smoker) | Monthly premium (Smoker) | Percentage increase |
|---|---|---|---|
| MLC Life Insurance | $25.58 | $58.32 | 227.99% |
| ClearView LifeSolutions | $25.77 | $50.96 | 197.75% |
| AIA Priority Protection | $30.13 | $57.63 | 191.27% |
| Asteron Life Complete | $30.18 | $61.55 | 203.94% |
| AMP Elevate | $30.29 | $59.38 | 196.04% |
| TAL Accelerated Protection | $30.48 | $58.21 | 190.98% |
| Zurich Wealth Protection | $30.91 | $59.89 | 193.76% |
| CommInsure Protection | $30.96 | $57.29 | 185.05% |
| OnePath OneCare | $30.96 | $56.03 | 180.98% |
| Zurich FutureWise | $32.51 | $59.92 | 184.31% |
| BT Protection Plans | $33.37 | $59.59 | 178.57% |
| AMP Flexible Lifetime Protection | $33.71 | $64.26 | 190.63% |
These prices were taken from finder.com.au's life insurance quoting engine on January 2017. Prices are an estimate and are subject to change at any time.
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Smokers, along with other high risk cases, are charged a much higher premium rate than non-smokers. Generally, these rates can be two or three times higher than the standard rate although the exact amount will vary between providers. Premiums are decided on the following questions:
The reality is that as a smoker you are likely to pay as much as double for life insurance. That said, there are some steps you can take to reduce your premium.
Getting life insurance cover for smokers can be challenging. Don’t let this deter you as it is much better to be protected and benefit from it later than none at all.
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