If you have a family, or you have expenses that you don’t want to pass on to relatives after you die, you should purchase life insurance. But if you are a smoker, be prepared to pay more for life insurance.
Even if you are just an occasional smoker, insurance companies are not going to give you the same rate as a non-smoker. Because of the increased medical issues smokers can face, insurance companies see you as a higher risk than your non-smoking counterparts, and therefore you will pay more for the same amount of coverage.
How much more? According to Jeff Rose, of Good Financial Cents, it could cost you almost four times as much to purchase life insurance if you smoke, than if you don’t. So, for every dollar your non-smoking friend pays for his insurance, you’ll have to match that dollar, plus pony up three more. It might seem unfair, but that’s the reality.
Classification of Insurance
Each insurance company has its own set of classifications, but they all use four different classifications for those they insure:
· Preferred Plus
· Preferred
· Standard Plus
· Standard
Where the insurance company places you will depend on several factors, including:
· Age
· General health
· Amount of insurance requested
· Type of insurance
So, let’s say you’re a 45 year-old woman in good health, seeking $100,000 in life insurance who has never smoked a day in your life. You would probably qualify for Preferred Plus, or at worst, Preferred. This will ensure you pay the lowest premiums. But now, let’s say you’re a 33 year-old woman in excellent health, and you are also seeking $100,000 in life insurance coverage, but you smoke. At best, you will get the preferred rate, but most likely, you will be placed in the Standard Plus or Standard rate level, all because you smoke.
In case you’re thinking, "But I’m only an occasional smoker. Doesn’t that matter?" No. Insurance companies don’t care whether you smoke a cigarette once a month or once an hour. In their eyes, you’re a smoker. Period. Unless you’re the exotic type of woman who smokes the periodic cigar…
Exceptions
Some insurance companies do not classify someone who smokes an occasional cigar as a smoker, so you could qualify as a non-smoker, provided you test negative for nicotine when you have your mandatory physical.
Warnings
So, now, if you’re a smoker, but don’t want to pay the higher premiums, you might be tempted to lie about whether you smoke on your application. Don’t. That’s insurance fraud, which is a very serious charge. Also, if you claim to be a non-smoker and you die from smoking-related causes, if the insurance company finds out you lied, they can refuse to pay your surviving family members any benefits. So, it’s best to just be truthful about your smoking status.
If you’re a smoker who needs life insurance, you have three options; admit you’re a smoker and compare life insurance rates to get the best possible premium in a bad situation, quit smoking before you get life insurance, or quit after you attain insurance and request a reduction in premiums. But keep in mind, you need to be nicotine free for at least 12 months to several years to qualify for the lower premium.
I am an accountant, a CPA. I'd been working for 10 years as a corporate rat when I decided to quit. I am now working at home as a consultant and full time blogger.
