4 ways smokers can get better life insurance rates

By Julie Bawden-Davis on July 8th, 2011

SmokerIf you are a smoker, expect to pay more for life insurance. While life insurance rates vary according to age, gender and other factors, individuals who use tobacco typically pay 50 percent more than nonsmokers, says James Miles, FSA, MAAA, a Consulting Staff Fellow with the Society of Actuaries.

"Life insurance companies charge higher premiums to persons with risk factors that increase the likelihood of death, and smoking tobacco significantly increases the likelihood of death at every age," says Miles.

Although some life insurance companies allow limited tobacco use, such as smoking the occasional cigar, the use of most smokeless tobacco products results in higher life insurance rates.

Despite such drawbacks, there are steps you can take to minimize the cost of life insurance coverage if you are a smoker.

When it comes to smoking, honesty is the best policy

Be forthright about how much you actually smoke. Besides being unethical, dishonest statements on a life insurance application is considered fraud and inaccurate information about your smoking habits can render your policy invalid.

Furthermore, misrepresenting nicotine use on your application is likely to be uncovered by the insurer anyway.

"Though insurance companies will ask if you use tobacco products, they will also test for it," points out Miles.

For most types life insurance, you'll need to undergo a medical exam, as well as provide a copy of your medical records. During the exam urine and blood will be collected and analyzed for a number of health indicators--nicotine is likely to be detected during this analysis.

"As part of their underwriting process, life insurance companies typically require a nicotine screen to confirm no tobacco use when higher amounts of life insurance are applied for (amount varies by company)," explains Miles. "Likewise, stating that you are a nonsmoker while the records maintained by your physician state that you are a smoker is not likely to result in the use of nonsmoker rates."

1. Ask about preferred smoker rates

Some life insurance companies offer "preferred" smoker rates to those who smoke and are in otherwise excellent health. In order to qualify for preferred smoker rates, you'll have to show optimum readings for cholesterol, have what is considered a healthy weight by medical standards and possess a clean medical history that is free of chronic conditions, especially any smoking-related illnesses.

Keep in mind that whether you end up in a preferred smoker or "standard" smoker risk class, your rates will still be higher than if you refrained from smoking altogether.

2. Get quotes from several life insurance companies

Obtaining life insurance quotes from several insurers is imperative when shopping for coverage as a smoker. You may find a significant difference between premiums, so be thorough in your comparisons.

"The consideration of tobacco use in classifying an applicant and premium rates themselves vary by company," notes Miles.

3. Savings in numbers: consider group insurance

Smokers may be able to save premium dollars by consider group life insurance. With group life insurance, risk is spread out over a number of people, and oftentimes group policies do not require applicants to undergo medical screenings.

"Group life insurance offered through an employer or an association may provide lower premium rates for smokers because group life rates are typically not based on tobacco use," says Miles.

Even with group insurance, you may still have to pay more than non-smokers; however, premiums are usually lower compared to the rates you would pay for an individual life insurance policy.

4. Quit smoking

If you stop using nicotine, it is possible to get lower life insurance rates, according to the National Association of Insurance Commissioners.

"The approach varies by company, but many life insurance firms require no tobacco use for a period of one year to be considered for standard nonsmoker premium rates," adds Miles. "Other companies require longer periods. The use of preferred nonsmoker premium rates usually requires no tobacco use for at least two years."

Don't let smoking stop you from buying life insurance

If you need life insurance, don't delay the purchase until after you have stopped smoking in order to get lower premium rates. You can't be sure of the timeline in terms of quitting, and even when you do stop smoking, you'll have to wait 12 to 24 months before non-smoking rates apply.

"When you stop smoking and then qualify for nonsmoker rates you can at that time apply to replace your insurance, either at the same life insurance company or another life insurance company, at nonsmoker premium rates," says Miles.

Julie Bawden-Davis

Julie Bawden-Davis is a Southern-California-based writer specializing in personal finance and insurance. Since 1983, her work has appeared in a wide variety of publications, including Family Circle, Ladies' Home Journal, Parenting, Entrepreneur and The Los Angeles Times.

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