6 May 2014 0 Comments

The High Cost of Nicotine Use

shutterstock_10645705If you are a smoker and have been coaxed into looking at life insurance by TV ads showing the low cost of term insurance, you have most likely been very disappointed when you responded to these ads.  Tobacco users pay much, much more for life insurance than those who do not partake.  I covered much of this in my April 6, 2013 blog, but based on inquiries, it deserves another look.  Here are the questions I hear:

If I use to smoke and quit, when can I qualify for non-smoker premiums?

42.7% of cigarette smokers who tried to stop smoking in the last year—actually quit for a period of time—started smoking again within a year.  For this reason, you will not qualify for lower premiums until you have kicked the habit for 12 months.  Even then, you will not qualify for premiums any better than standard non smoker rates.  Preferred premiums will likely not be available until you have passed the 3 to 5 year abstinence mark.

What if I only smoke an occasional cigar?

That depends on what both “only” and “occasional” mean.  If you also smoked cigarettes within the past three years, it will be more difficult for you to qualify for lower non tobacco user premiums.  If, with the exception of the “occasional” cigar,  you would otherwise qualify as a preferred non tobacco user, some insurance companies are willing to overlook the occasional celebratory cigar—no more than once a month—and still offer non tobacco user premiums.  Just make sure that you do not use any tobacco products for at least a week prior to your insurance medical exam.

I’m a smoker and think my higher premiums are unfair.

Actually, smokers are probably not being charged enough to account for the higher risk.  Smoking is the leading preventable cause of death.  About 1 out of 5 deaths per year are caused by the use of tobacco products.  Smoking causes heart disease, cancer, stroke, lung disease (including emphysema), bronchitis, chronic airway obstruction and diabetes.  Dependence on nicotine is harder to kick than dependence on cocaine, alcohol or marijuana.

What about the use of marijuana?

Insurance companies vary greatly here.  There is virtually no added mortality risk as the result of marijuana use and dependence on it is less than nicotine, cocaine or alcohol.  If the marijuana is being used under a medical prescription, the underlying medical condition dictates the underwriting—not the marijuana use itself.  At this writing, some insurance companies might overlook the occasional, recreational use of marijuana.  If you are a user, shop for the best offer.

Coming up I’ll cover options available for life insurance owned by Irrevocable Life Insurance Trusts no longer needed to cover estate tax.

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