If you smoke, you’ll pay more for term life insurance, but how much more may depend on what you’re smoking and how often.
Term life insurance covers a set number of years, as opposed to whole life insurance, which lasts until death. If you can get this insurance through a group, such as a plan offered by your employer, the cost of your smoking risk is spread among smokers and non-smokers, so your rates will be lower.
If you’re a smoker looking for individual coverage, comparing costs is critical. Different habits may trigger different rates, and even those vary from company to company.
“Smokers oftentimes have a double whammy on their rates,” says Brian Ashe, treasurer of the nonprofit Life and Health Insurance Foundation for Education (LIFE).
Lumping smokers together
Because they are more likely to exercise less and to have higher cholesterol and blood pressure, smokers may start at a more expensive level of life insurance. Smoking’s risks on top of those other health issues can bump up your rates more than 300 percent, Ashe says. The federal Centers for Disease Control and Prevention says cigarette smoking leads to one of every five deaths in this country.
Most life companies don’t care whether you smoke one cigarette or two packs of cigarettes a day when you're classified as a smoker. Some also don’t draw lines between smoking cigarettes, cigars or a pipe.
Genworth is among the life insurance companies that lump smokers together except for those who occasionally puff on a celebratory cigar. In that case, you can escape smoker rates by having only one cigar a month, as long as your urine test is negative for nicotine, says Dr. Marjorie Keymer, Genworth's chief medical director for life insurance.
Genworth’s smoker rates, even before any tobacco-related health problems are figured in, are twice as much as those for non-smokers. Here’s an example: A 25-year-old man who uses tobacco and is applying for a 10-year term life policy for $100,000 would pay $292 a year. That same person would pay $147 a year if he didn't use tobacco, according to Keymer.
Many life insurance companies do offer lower rates for people who chew tobacco or smoke pipes or cigars. Ashe says that's because that type of tobacco use is more infrequent and often doesn’t involve inhaling smoke.
Linda Freeman, life insurance marketing assistant at Pekin Insurance in Illinois, gives this example of how rates compare depending on what you smoke. She says a 10-year, $100,000 term life policy for an otherwise healthy middle-aged man would cost $204 a year for a cigarette smoker, $168 for a cigar or pipe smoker or tobacco chewer, and $156 a year for a non-smoker.
Pot not part of the mix
Marijuana smokers aren’t part of the smoking equation, Ashe says. That's because insurance underwriters lump it into a category like alcohol consumption.
“If the (marijuana) usage was relatively infrequent and wasn’t abusive … then the person could probably qualify for regular rates,” Ashe says.
If you’re smoking pot heavily, you may pay higher rates or even be declined for coverage, he says.
If you can get term life insurance through a group plan, you're usually better off, says Richard Kappers, director of strategy and marketing at life insurance company CIGNA. Under a group plan, the difference in smoker vs. non-smoker rates will be smaller – only about 20 percent to 40 percent higher for smokers, he says, as opposed to sometimes triple the difference under an individual plan. As part of a group, you also won’t have to undergo the medical tests you would when applying for an individual policy.
Here's some good news on the smoking front: After just one tobacco-free year, most life insurance companies may qualify you for preferred status, which lands you in the company of people getting the best rates.
If you’re not ready to quit, you may want to apply for a smoker's policy now and seek a lower rate when you’re able to say you’ve quit for a year, Freeman says. The longer you wait, the higher the premiums go.
How do insurers know whether you really quit? When you apply for insurance, you give access to your medical records. If your doctor knows you smoke, your insurer will know, Kappers says.
Life insurers also can require blood and urine tests. These tests are so sensitive that they can distinguish between whether a trace of nicotine comes from your own smoking or someone else's, Ashe says. If you wear a nicotine patch or chew nicotine gum, tests will indicate that you're a smoker.
Some smokers may be tempted to lie about their habits to get a better rate. Be aware that this is considered fraud, and insurance companies take this seriously. If a company finds out after your death that you were a smoker, your beneficiaries wouldn’t be able to collect on your life insurance policy.
It’s possible, but statistically unlikely, that someone who bought a term life policy might start smoking after securing the policy. That’s a decision you can keep to yourself. Insurers don’t expect you to tell them picked up the puffing habit.
Rates are down
Another bit of good news: Term life rates for smokers and non-smokers alike are down 40 percent to 60 percent from 15 to 20 years ago, Ashe says.
“People are living longer, so mortality has improved and expenses for insurance companies are (lower) because of the advent of technology,” he says. “If there’s one thing that has actually decreased in price over the years, it’s life insurance.”