6 April 2013 0 Comments

When There’s Smoke…

smoking a cigaretteWhere there’s smoke…there’s an increase in life insurance premiums.  Those who are regular users of tobacco/nicotine products will pay a substantial amount more for their life insurance than those who do not use.  How much more?  Many factors go into this answer, including duration since last use of tobacco, age at issue, type of tobacco and other health factors.  But the increase in premium for smoking could be about 400% for 10 or 20 year term and about 220% for lifetime guaranteed Universal Life.

So, cigarette smokers listening to TV or radio ads that give the example of how a 35 year old can get a $1,000,000 Ten year term policy for $26.00 a month can expect to pay about $100.00 per month, assuming all other health factors are equal.  About 40+ years ago when I was that age I had a 2-3 pack per day habit.  It wasn’t easy quitting.  At that time we really weren’t aware of the devastating effect of tobacco use.  Even insurance companies weren’t charging extra for smokers, but then the non-smokers paid much more.  If there was ever an incentive for quitting, these extra premiums for smokers should put the fear of God into those who have not overcome the addiction, or those youngsters tempted to start.

Now I’ll come off my soap box and provide some information that should be helpful.  There are many nuances to how smoking is defined.  What about cigars (even the occasional one); pipes; chewing tobacco; nicotine gum.  And then there’s marijuana; how is that looked at by life insurance underwriters?

I’ll start with the easy one:  if you have smoked cigarettes—in any quantity—in the past 12 months you will not be eligible for non-tobacco user premiums.  As far as I know, that is uniform throughout the industry.  Once the year of abstinence has transpired, most insurance companies will still not issue their preferred premium class and none of whom I am aware will issue preferred-best rates.  Normally these premium classes will require 3-5 year abstinence before they are available.  Notice I said that most insurance companies will not issued preferred after a year, however at least one major carrier will, so make sure your agent knows the marketplace.

Next, I’ll move on to tobacco use other than cigarettes and marijuana, but that will have to wait for my next entry.

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