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.
Insurance providers will ask specific questions to classify you as a smoker or not. 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.
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?" Provided that 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 and often so 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. Life insurance companies will classify your health into one of several categories.
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.
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% |
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 based on certain variables from the following:
- What type of smoker are you? This refers to your being a casual or heavy smoker. Insurance providers will want to know how many sticks or packs of cigarettes you smoke every day as this will determine the health risks you are exposed to. This also includes the type of your nicotine use such as tobacco chewing, cigarettes, cigars, or nicotine patch.
- How long have you been smoking? Insurance underwriters will ask when you started smoking as this will also determine how high your health risk exposure is. The longer you have been smoking the higher the risks for critical illnesses related to smoking.
- 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.
- Kick the habit: 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 as this is the minimum length of time insurance providers require for one to be declared a non-smoker.
- Shop and Compare: As with anyone taking out life cover, it is important for smokers to consider the different types of policy options available to them. 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. This way, you are able to determine which policy will meet your needs most as a smoker?
- Ask around: You might have friends who have insurance cover already and can give you some insight and suggestions which policy will complement your needs. They can also provide you information on the insurance provider you are planning to get cover from. Find more information on the policy and the provider from reviews and forums, so you can obtain opinions from others who already have previous experience with the insurance plan.
- Ask an expert: If you don’t know where to begin, ask for help from an insurance adviser. An insurance adviser can explain to you the features and benefits of different life insurance plans, answer any question you might have and tailor your needs accordingly to a suitable life insurance plan. When looking for an insurance adviser, however, make sure to get someone with a large portfolio and extensive experience because he will give you much more options than someone with a limited portfolio. Also look for someone who will consider your needs first rather than his commission. A good insurance adviser will guide you every step of the way and look for your input and well-being.
Getting life insurance cover for smokers may potentially be challenging. However, this should not deter you as it is much better to be protected and benefit from it later than none at all. It is a given that you will pay a much higher premium than the regular insurance policy holder, but the peace of mind you have now and the benefits you will have in the future is invaluable.
