“Smoker” Life Insurance Rates – Say Good-Bye and Save

It used to be that 50% of the adults in Canada smoked, but times have changed since that statistic was released in 1965.  Today between 15% and 20% of adults admit to smoking some form of tobacco on a regular or occasional basis, and many Canadians are thinking about quitting or have quit altogether.  This is a great decision, not only from a personal health perspective, but from a financial perspective.  Not only will the expense of cigarettes be saved, but when a life insurance policy holder has been tobacco/nicotine free for 12 months, then they can apply have the “smoking status” taken off of the policy.  This may potentially reduce the premium by 40%!!  It all adds up to a whole bunch more green in the jeans.

Above I underlined “tobacco/nicotine fee” for a few reasons.  During some recent client interactions this topic came up.  The client had stopped smoking for 6 months but was using a smoking cessation product (i.e. Nicorette, or the patch) to help kick the habit without going cold turkey.  The question was posed if we could apply to remove the “smoker” status on the policy after 6 more months?  Technically the client will not have smoked for 12 months, therefore is no longer a smoker. BUT, when this question was put to a list of underwriters it became clear that by “non-smoker” the insurance companies really mean “non-nicotine user”.  To avoid miscommunication, insurance companies should change the terminology from “smoker” and “non-smoker” to “nicotine user” and “non-nicotine user”.

We all know that cigarettes have more than 4000 harmful chemicals in them and “the patch” or the nicotine gum have only 1 (or very few), so why won’t the insurance company cut the client a break?  This was also asked.  One thing to keep in mind is that insurance companies are discriminatory by nature.  So the reason that there won’t be any “breaks” is because it is presumed that there is a greater propensity for the client to resume smoking while they are still reliant on any form of nicotine.  Also, nicotine may have adverse effects on heart function.

We can derive from the approximate premium savings of 40% that smokers are 40% more likely to die or develop a critical illness when they smoke compared to non-smokers.  But when a smoker quits for 12 months, all the previous years of smoking are wiped clean in the eyes of the insurance company and you can begin to pay the same rate as a non-smoker.  To request this change to a policy the insured person must use their broker, or find a new broker that can help by representing them to the insurance company.

The Bottom Line:

If you have been nicotine free for at least 12 months and have a life insurance policy that has “smoker” rates, then it’s time to call your advisor/broker and ask about a premium reduction.

If you’re currently a smoker and considering purchasing life insurance but was waiting to quite to avoid paying higher premiums, then don’t keep your family at risk.  Apply for the coverage and then request a rate reduction later, when you’re nicotine free.

Other Interesting Facts:

  • A person may be able to smoke 1 cigar each month and still get non-smoker rates.  Some companies are more lenient than others on this.  But touch one single cigarette in a 12 month period and your application for insurance will come back with a “smoker” rating.
  • It’s interesting to note that while the percentage of Canadians who smoke has been reduced by nearly 70%, obesity rates have doubled.  I’m not a statistician so I don’t know if there a correlation, but it’s an interesting coincidence.

By Jonathan at www.CanadianLifeQuotes.com and www.IntegralFinancial.com




*This article is for information purposes only and is not intended as specific advice for any individual.  Please review your policy contract for complete details of your existing coverage and speak with a licensed professional if you have any questions or concerns.

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