How does smoking impact your life insurance application?
Key Facts
- Smoking does not only affect your health in the long run, but also the amount of premiums you pay for your life insurance.
- Your premiums will 2-3 times higher compared to someone who doesn't smoke.
- You will be eligible for a reduction on your premiums if you have quit smoking for at least 12 months.
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.
'Use of tobacco in the last 12 months'
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.
Can I lie on my application?
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.
Check your superfund for life insurance
- You may already have cover! If you have superannuation, there's a chance that life insurance is already included.
- You may be covered regardless of smoking status. Superfunds will often blanket cover it's members with default insurance, regardless of smoking status.
- Note: If you have applied for an increase in cover, your smoking status may be taken into account.
Example quote
| 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 |
Which policy increases premiums the most for smokers?
| 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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Life insurance premium costs for smokers
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:
- What type of smoker are you? Are you a casual or heavy smoker? Insurance providers will want to know how many individual or packs of cigarettes you smoke every day to determine the health risks you are exposed to. This also includes your preferred method: tobacco chewing, cigarettes, cigars, or nicotine patch.
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How long have you been smoking? Insurance underwriters will also ask when you started smoking to determine how high your health risk exposure is. The longer you have been smoking the higher the risks for critical illnesses are.
- When did you quit? As mentioned earlier, you will only be determined a non-smoker if 12 months or more have passed since you had your last cigarette.
How can you get affordable life insurance if you smoke?
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.
- Quit smoking. The first and most logical step, of course, is to improve your current lifestyle. Quitting smoking will have a big impact in reducing your premium rates. If you have quit for 12 months or more, you have a chance to get lower premiums by being declared a non-smoker.
- Shop and Compare. Quitting may not be a realistic option for some. So just as with anyone taking out life cover, it is important to consider the different types of policy options available to smokers. Find out what benefits and features are relevant to your needs. Once you have decided on the type of policy you want, shop around for similar policies from different insurance providers and compare their rates, exclusions, and inclusions.
- Ask an expert: If you don’t know where to begin, ask for help from an insurance adviser. An insurance adviser can explain the features and benefits of different life insurance plans, answer any question you might have and tailor a life insurance plan suitable to your needs.
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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