Quit smoking to slash your life insurance premiums

The health implications of smoking – not least the risk of pneumonia from being forced to stand outside in the wind and rain – are well known. But what about your financial health? Sarah Routledge investigates cigarettes and life insurance.

Smoking costs more than ever, and not only because of tax hikes in this year's Budget. Life cover premiums are almost double for a smoker than a non-smoker - a compelling financial reason to quit, in addition to the obvious health benefits.

Life insurance is very competitive, especially now that it is so easy to compare quotes on the internet. Keeping premiums low is essential for insurers to retain business. But smokers are likely to miss out on these deals because they represent a high risk to insurers.

High cost of smoking

For example, a policy with Legal & General for a 25-year-old male smoker wanting £100,000 worth of life cover over 20 years is £184.80 a year - but a non-smoker of the same age would pay just £108, or £9 per month.

A female smoker will pay less than a male smoker, with an average cost of £11.20 per month, or £134.40 per year, but a female non-smoker will pay as little as £7.50 a month.

For a male smoker with a 20-a-day habit, the cost of cigarettes (on average £5.60 a pack) plus the added costs of life cover compared to a non-smoker over 25 years, adds up to a staggering £53,020.

"Smokers have to pay more for life insurance and critical illness cover because smoking is a serious risk to your health and a major cause of coronary heart disease and lung cancer," explained Joe Wiggins, from Legal & General.

Quitting right now will give immediate health benefits and clearly save you money on the cost of packs. But insurers will not consider you to be a non-smoker until you can say you have not touched a cigarette in a year.

Critical illness cover (CIC) premiums are also affected lifestyle. A non-smoking 40-year-old male, on average, will pay £49.26 per month for CIC and a 40-year-old smoking male £93.78.

The smoker gets hit by a whopping £44.52 extra per month to their CIC – that's an additional £534.24 just for smoking and a total of £1125.36 for annual CIC.

Onlyinsurance.com's Ian Durell said: "Smokers will pay twice the price for CIC cover than a non-smoker – it's a no-win situation for the smoker, their nicotine addiction is tightening both their heart and purse strings."


Honesty is the best policy

With such a high cost for smokers seeking life insurance, the temptation to lie on the application form is strong. But insurers are on the lookout for smokers who fib on their application forms.

"We've found that one in ten people (eight per cent) hide the fact that they smoke – either because they aim to give up soon or because they consider themselves a 'social' smoker rather than a 'real' smoker," Mr Wiggins said.

And if a smoker lied on their application?

"It would depend on the case, but they may face a reduced payout or even have their claim declined altogether," Mr Wiggins warned.

It is quite simple for an insurer to check whether you are a smoker. You may be asked to provide a saliva sample, for example.

Or an insurer could check your medical notes, if a claim was made.

"Smokers who declare they have given up but continue to smoke, no matter how infrequently, will be paying for nothing should they die from a smoking related condition," said Mr Durrell.

"The policy simply won't pay out and their beneficiaries will be the losers."

Another insurer, Norwich Union, warned that it would treat lying about smoking on your insurance application as it would any other non-disclosure – it may invalidate the policy. So even if you die of a non-smoking related cause, your beneficiaries may still end up with nothing if the claim is investigated.

Of course, this only applies to smokers who lie at the time of their application. Provided you have not touched cigarettes for twelve months when you apply for a policy, you are free to take up smoking again the next day and still pay non-smoker rates.

Take action now

Obviously, the best thing you can do for your wallet (and your health) is to give up smoking – and remember to tell your insurer in a year's time.

But there are other things you can do to cut your premiums – for example, remember to shop around to find the best deal, as quotes can vary between insurers.

"Staying fit and healthy would also help – those with a high BMI may also find that they have to pay more than average," Mr Wiggins advised.

Another important thing to think about is your health at the time of your application, Mr Durell added.

"There are some things you cannot avoid, like your family medical history," he said.

"But if you get your life cover sorted out early, you will be on a lower premium, because the older you get the greater the risk of developing health problems."

Sarah Routledge

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