Let’s just start this off with the obvious – everything else being equal, people that smoke will pay higher premiums for life insurance than folks who don’t. However, there are some caveats to that which we will explore in this article. For example, the type of smoking (or tobacco use) can be looked at drastically differently by individual companies.
First off, let’s look at the economics behind this situation.
Why life insurance premiums are higher for smokers
Statistically speaking, cigarette smokers die earlier than non-smokers and that’s really what it all boils down to. According to the American Cancer Society:
“More Americans will die from smoking cigarettes than alcohol, automobile accidents, HIV, guns, and illegal drugs combined.”
And it’s not just lung cancer we’re talking about. Smoking contributes to:
● COPD (Chronic Obstructive Pulmonary Disease)
● Chronic bronchitis
● Increased chance of clot formation in your blood.
● Heart damage. Smokers have double the chance of suffering a heart attack compared to non-smokers.
● Increased chance (up to 50% higher) of having a stroke.
● Weak bones. Women who smoke are much more likely to develop osteoporosis in their lifetime.
● And the big one, of course – cancer. According to studies by the National Cancer Institute, “Smoking causes cancers of the lung, esophagus, larynx, mouth, throat, kidney, bladder, liver, pancreas, stomach, cervix, colon, and rectum, as well as acute myeloid leukemia.”
Okay, so we’re not trying to be a buzzkill. You already know that smoking is unhealthy. Heck, the author of this article smoked from age 17 to 55. There is no judgment here. I am only pointing out a short list of why tobacco premiums are higher than non-tobacco. To keep things simple, life insurance premiums are based on your:
● Health history
● Life history (type of work you do, hobbies, recreational activities, etc.)
The bean counters that set insurance premiums use these factors to determine the likelihood of a person dying before their next birthday. The higher the probability of a claim, the higher the premium.
Smoker rates are further broken down to Preferred tobacco and Standard tobacco. Preferred will be better priced than Standard, of course, but even Preferred tobacco rates are considerably higher than Standard Non-tobacco. That will be the case regardless of which insurance company we’re pricing.
For example, here is the lowest pricing currently available for a 40 year old male at Standard Non-tobacco rates for a $500k 30-year term policy–
And here is the same guy rated at Preferred Tobacco–
More than double the price. Ouch! It looks like insurance companies do not like smokers. Don’t take it personally, though – it’s just that the likelihood of paying out a death claim sooner is much higher. The longer a life insurance policy is in force means the longer the company is receiving the premium payments for that policy. Premiums paid are one of the many moving parts which allow an insurance company to be profitable. And make no mistake, insurance companies are in business to make a profit.
Then again, so is your local grocery store.
Not all smoking/tobacco habits are looked at the same
Yes, it’s true. Insurance companies all have their own guidelines under which they operate. There is no one-size-fits-all book of instructions which they all share. This is fantastic because it opens up certain opportunities for some situations.
Different smoking/tobacco methods as viewed by life insurance companies
● Chewing tobacco/Snuff/Snus
● Vaping and electronic cigarettes
● Nicotine patch
● Nicotine gum
Life Insurance and Cigarettes
Of this list, only cigarette smoking is always going to be subjected to tobacco rates. There is simply no way around it. If you apply for a fully-underwritten life insurance policy part of the underwriting process is a medical exam (commonly known as a paramed). This exam consists of a nurse recording your height and weight, taking your blood pressure, drawing a vial of your blood, collecting a urine sample and asking you a bajillion health questions. There can be more to it but those are the basic parameters that insurance underwriters will require.
The nicotine from the cigarettes will be present in both the urine sample and the blood (actually it is cotinine at that point but let’s not get into the science). When the underwriting department gets the results of your test, the ‘tobacco rates’ will automatically be applied.
If you apply for a policy that does not require the paramed exam (commonly known as a Non-Med policy), there will still be a question on the application regarding tobacco use. Something along the lines of:
In the past 12 months, has the Proposed Insured used any form of tobacco, or any form of nicotine replacement such as a patch, gum, or electronic cigarettes?
So you get dinged that way too.
Footnote: Don’t get cute and say ‘No’ to that question if it should be ‘Yes’. For one, that would be considered insurance fraud which could result in serious consequences. For two, the insurance company could rightfully deny the death claim outright or adjust it to what your premiums would have actually bought based on tobacco rates. Either way your beneficiary would not receive the expected death benefit.
Life Insurance and Cigars
The occasional use of cigars may or may not be cause for higher tobacco rates. Again, every company operates under their own guidelines and the definition for occasional can vary greatly.
For example, American General (AIG) will allow Standard non-tobacco rates for cigar use of no more than one cigar per week and no cotinine present in the urine and blood. Lincoln Financial, on the other hand, will allow Standard non-tobacco rates for cigar use of no more than 1 cigar per month. However, Lincoln Financial will also offer Preferred non-tobacco rates to a cigar smoker who qualifies, based on all of their other underwriting factors.
Important to note – The cigar usage must be admitted to on the application or during the paramed exam. No cotinine present in exam and no other type of tobacco use allowed.
Yes, it gets confusing. Don’t try to to do this on your own. Well, you can… but it may cost you thousands of dollars over the long run. Your call.
I am only using these companies as a reference for the cigar subject. They are not meant as recommendations. There are many other factors that come into play as every person I talk with has a different set of circumstances.
Life Insurance and Pipe Smokers
Very similar to the cigar outline. Different companies, different guidelines. (Are you starting to pick up a recurring theme in all of this?)
To stick with the companies used in the cigar scenario, American General will only offer Standard tobacco rates to pipe smokers. Lincoln Financial will allow Standard non-tobacco rates but will not offer Preferred non-tobacco rates like they will for cigars. Kind of odd.
Again, it’s worth your while to work with someone who can pick apart the intricacies of all the different insurance companies. Wouldn’t you think?
Life Insurance and Chewing tobacco or snuff
Choices grow even more limited with smokeless tobacco such as chew, dip or snuff.
There have been studies which suggest that smokeless tobacco is safer than smoking cigarettes. There are also studies which state that both are equally dangerous, albeit in different ways. Regardless, the vast majority of insurance companies classify them the same for their underwriting purposes. Meaning, if you chew you will only qualify for smoker’s rates.
That being said, a couple of companies will bend a bit here and earn the title of Chew-Friendly life insurance outfits.
● Lincoln Financial (again) will offer Standard non-tobacco rates for chewing tobacco.
● John Hancock will offer Standard non-tobacco rates as well. They refer to it as Standard Non-Smoker.
● Prudential will offer Non-Smoker Plus rates for chewing tobacco. This is a step up from basic Standard rates therefore a lower premium. We like lower premiums! Still not as attractive as a Preferred rate but darn good for tobacco use. Prudential will also make this rate class available to cigar and pipe users.
Important footnote: Regardless of the company, all the other underwriting guidelines must be met to qualify for these non-tobacco rates as well. In other words, if your blood pressure is through the roof and your total cholesterol is over 400 you will not receive a Standard non-tobacco rate. Even if you only dip once a week or only smoke a cigar on your birthday and the 4th of July.
Life Insurance and Vaping or electronic cigarettes (E-cigs)
Things get a bit curious (in a bad way, premium-wise) with these Electronic Nicotine Delivery Systems. It’s the nicotine in tobacco that gets a person hooked on (addicted to) cigarettes and chew. However, the nicotine in and of itself is not the chemical that creates all of the health issues for smokers. It’s the tar and carcinogens (and multiple other poisons which are hard to pronounce) which contribute to that.
Vaping and e-cigs don’t produce the nasty substances that are found in combustible tobacco products. That doesn’t seem to matter, though, as this method of nicotine use is almost universally treated as cigarette use by life insurance companies. With the exception of Prudential I am not aware of any company that will offer anything but smoker rates to folks who vape. Even the companies listed above that look kindly upon cigars, pipes and chewing tobacco will frown upon vapes and e-cigs.
So, if you fall into this category, Prudential is your play. They will offer the Non-Smoker Plus rate category shown above.
Life Insurance and Nicotine patches and gums
Same as just about everything else we’ve covered in this article – these products are subject to individual company guidelines. Prudential is an easy go-to; John Hancock as well. Maybe.
Just talk to a broker. Life’s too short to try to figure this all out on your own. Plus, it doesn’t cost you a penny to put us to work for you.
Simply complete the instant quote form on this page to see rates and a life insurance agent will find the best rates on your behalf.