Does smoking affect my life insurance premium?
The short answer is: yes. We all know smoking harms your health, and the increased risk of developing a fatal illness bumps up the cost of smokers’ life insurance.
In 2011, Sainsbury's Finance reported that anyone who has kicked the habit could save up to 46% on their life insurance premiums – although you will need to have given up for at least 12 months before it makes a difference.
Who qualifies as a "smoker"?
If you have used tobacco at all in the last 12 months, you are classed by insurers as a “smoker” – it doesn't matter if you've enjoyed one cigar on a special occasion, or are a habitual 20-a-day smoker.
How will my insurer know if I smoke?
You will be asked whether you smoke when you apply for life insurance. Some smokers lie about their habit, claiming they are a non-smoker – but this is extremely risky. Answers to other medical questions from your insurer could indicate that you are a smoker, and insurance providers also undertake checks on the medical histories of about 20% of their applicants. If you're dishonest in your insurance application and later become critically ill with a disease such as cancer, your medical records will soon reveal to your insurance provider if you are a smoker.
The Association of British Insurers (ABI) says a customer who fails to disclose that he is a smoker "will need to give a particularly credible and convincing explanation" if the non-disclosure is not to be classed as deliberate or made without any care.
If you have lied, your life insurance provider may refuse to pay out. Alternatively, they may look at the amount you have paid on your premiums as a ‘non smoker’ against how much you should have paid as a smoker – if you have only paid 50% of what you should have paid, the insurer may then pay out just 50% of the policy's benefits.
Can I reduce my premiums by giving up smoking?
If you've kicked the habit and been smoke-free for 12 months, contact your insurer – they may just give you a reduction on your monthly premiums. If you've smoked for decades, however, insurers may consider that the damage has already done, and may not be willing to reduce your premiums.
The ABI says that insurance companies usually want to look at your medical profile if you have given up smoking, so they can make a judgement before amending your premiums. They may ask for a medical report from your doctor, and if this contains anything that concerns them they may ask you to have a chest x-ray. Whatever the outcome is with the cost of your life insurance, if you give up smoking you will still save a huge amount of cash on buying cigarettes.