Everyone knows that smoking is bad for their health, but did you know that smoking may affect a person’s wealth as well? Granted, the UK government routinely levies a sizable tax to dissuade people from continuing the potentially deadly habit, but the dangers of tobacco use may also impact the price of your life insurance policy as well.
In fact, life insurance providers take the risks associated with smoking seriously enough to increase premiums by 33 percent or more for a 30-year old smoker. Smokers aged 50 or older often pay twice as much for their life insurance coverage.
Why, you might ask? Well, smokers are much more likely to suffer from a critical illness or an early death, putting them in an increased risk category and making them more likely to file a claim.
Kicking the habit once and for all is the single most effective way to reduce your life insurance costs. However, how do you know if you are considered as a smoker in the eyes of the life insurance companies?
When it comes to cigarette usage, insurers are pretty cut and dry. Basically, if you have had a cigarette in the last 12 months, insurance companies will classify you as a smoker. This includes every type of smoker, from someone who has an occasional cigarette on a Saturday night to a pack a day smoker.
Typically, smokers are given the same treatment by nearly every insurer in the industry, because underwriters do not normally consider the number of cigarettes a person smokes when they calculate the cost of a premium. The only exception to this is for elderly applicants or applicants looking to insure their life for an unusually large amount.
• The cost of premiums for smokers can often be twice as much as the amount paid by non-smokers.
• A smoker that quits can be classified as a non-smoker after a minimum of 12 months of abstinence.
• Life insurers typically perform medical records checks on 20 percent of applicants to determine if they are telling the truth about whether or not they smoke.
Stopping smoking can reduce the price of your policy massively; however, stopping smoking can be a daunting task and can be difficult. Without the right support and methods in place, you are far more likely to relapse.
You can still get your nicotine fix with e-cigarettes. The e-juice in them contains nicotine, as well as propylene glycol, glycerine and water. However, the effects of vape pens are much less, especially as they don't contain tobacco.
Not only will not smoking decrease your policy premiums, they can change your health massively. You may start to feel much fitter and could welcome a much healthier lifestyle.
Due to the fact that life insurance premiums are much higher for smokers, it may be tempting to lie about your tobacco use in order to keep your life insurance costs down. However, if you lie about smoking, other medical questions that are asked may reveal that you are a smoker and result in a premium increase of 30 percent or more.
Life insurance providers also randomly check the medical histories of approximately one-fifth of all applicants in an effort to weed out dishonest applicants. If a life insurance policyholder were to suffer from a critical illness, such as leukemia, their insurer would screen their medical records and flag whether or not they are a smoker.
When it comes to dealing with a policyholder that has lied on their application, life insurance providers typically have two options. Compare insurance policies.
The first option is to simply not payout a claim, and the second option is to compare the amount of money that a policyholder has paid while being classified as a ‘non-smoker’ to the amount they would have paid if they would have declared their habit, and adjust the benefits accordingly.
For example, if you have only paid 70 percent of the amount that you would have originally paid, your insurer will only provide you with 70 percent of the policy’s benefits.
The Association of British Insurers states that the medical profiles of policyholders are examined if they quit smoking in order to determine any changes in their premium.
If you quit smoking, your insurer will likely seek a medical report from your family doctor. If the report were to ring any alarm bells, you may be asked to undergo a chest X-ray. Your age and the value of the life insurance policy will also be taken into consideration during the process.