Evander Jones
Life insurance helps families in many ways, but the cost varies significantly depending on lifestyle choices. Generally, smokers pay higher amounts due to the increased health risks. Here are 10 facts about what insurers consider in this case and what it means for the costs.
The Classification of a Smoker
Insurance providers classify applicants based on their usage of products, like cigarettes, cigars, chewing tobacco, nicotine patches, and e-cigarettes. Even occasional or social drags can place one in the smoker category, as insurance companies aim to mitigate risks associated with any level of use.
Average Cost Difference
If you are a regular, the average cost of your life insurance would be significantly higher than standard rates. A 30-year-old male non-smoker in the US can expect to pay approximately $221 annually for a $500,000, 20-year term policy. Conversely, a smoker of the same age would pay around $755 annually, representing a 244% increase.
Why They Pay Higher Premiums
Smokers pay higher insurance premiums because of the well-documented health risks associated with the use. They are more likely to contract respiratory diseases like lung cancer and heart failure. To offset the financial risk, they are charged with double or even triple the amount paid by others.
Types of Smoking Considered
The type of smoke and the brand used by the applicant are also factors. Occasional cigar users or those who use harmless versions might qualify for slightly lower rates, but some insurance providers still classify them as smokers. E-cigarette and vaping users are also put under the same category by many companies.
Discounts and Alternatives
Some providers recognize people’s efforts to reduce their habits and offer discounts or customized policies. For example, participation in cessation or rehab programs might make policyholders eligible for lower rates after successfully quitting. Additionally, group life insurance policies, often provided through employers, may offer more affordable options.
Impact of Quitting the Habit
People who successfully quit smoking can save substantial amounts over time. Most companies require applicants to be tobacco-free for at least 12 months to qualify for standard insurance premium rates. After this period, policyholders can request a reevaluation, which often involves a new medical exam to confirm their status.
Medical Tests Serve as Proof
The test for nicotine and its by-products is conducted through blood or urine samples. In addition to the test, insurers also review the applicant’s medical history for related conditions like high blood pressure or respiratory issues. These evaluations help the providers gauge the overall risk level and determine appropriate premium amounts.
Age of the Applicant
Age plays a critical role in determining life insurance premiums for these applicants. Younger ones pay lower premiums compared to older regulars, as they are perceived to have fewer immediate health risks. However, the cost difference widens as applicants age due to the impact of prolonged use.
Policy Types and Their Costs
There are three categories of life insurance. Term life insurance serves for a limited period and is generally more affordable. On the other hand, complete life insurance offers lifetime coverage but much higher premiums for smokers. Universal life insurance combines some elements of term and whole life policies.
More Factors the Insurers Look for
Insurance companies also evaluate other criteria to determine the premium amounts. These include gender and family medical history. A smoker with excellent physical health and a healthy family history might receive better or similar prices than a non-smoker with chronic health issues or poor medical records of family members.
