Life insurance for smokers

Why do smokers have different life insurance rates?

Life expectancy statistics show that smoking is the leading cause of preventable death in the U.S. According to the Centers for Disease Control (CDC), more than 16 million Americans have a smoking-related disease, with 480,000 people dying annually due to smoking or second-hand smoke exposure.

Smokers generally have higher life insurance rates than non-smokers. This is because life insurance is based in part on life expectancy and health status, and smokers are considered at higher risk of premature death. In other words, the insurance company determines that by insuring a smoker or someone with a smoking-related illness, it will likely have to pay out a death benefit to the beneficiary sooner than it would for a non-smoker.

Individuals who used to smoke but do not anymore may still see higher rates than non-smokers because of the continued risk of smoking-related diseases. However, if you stopped smoking at least a year ago, you may qualify for non-smoker rates.

How do life insurance companies classify smokers?

Each life insurance company will have its own method of determining classification for smokers. Although smoking cigarettes is almost always going to lead to someone being assigned to a smoking risk class, other forms of tobacco usage may differ based on the company and the usage. For example, someone who occasionally has a celebratory cigar or chews tobacco once in a while may be classified as a non-smoker by the insurer. In these cases, most insurers require that their use must be infrequent enough that nicotine doesn’t show up in the individual’s medical exam results.

Cannabis usage may also be factored in differently by each company. How often and the method by which you consume marijuana are two primary factors insurance companies consider. With marijuana use, some insurers are more lenient than others. If you use cannabis for medical purposes and have a legal medical card, instead of putting emphasis on the marijuana use, insurers generally focus on the medical condition itself.

As part of the underwriting process, insurers classify policy applicants into a risk category, which ultimately determines the cost of life insurance. There are four general categories, with preferred plus being the highest and most desirable rank, and there are two categories designated for smokers, as the table below shows. Those who qualify for preferred tobacco are eligible for lower rates than standard tobacco. Classification names may vary slightly from insurer to insurer.

Applying for life insurance as a smoker

When you apply for life insurance, your application will typically ask you if you’re a smoker. Life insurance companies treat smokers as high-risk policyholders since smokers are more likely to develop health issues and pass away at a younger age.

Your life insurance company will likely fact-check your application by requiring a medical exam. Most (but not all) life insurance policies require you to complete this exam. During the medical exam, a sample of blood, saliva or urine may be taken. When analyzed, it can indicate whether nicotine or cotinine, a metabolite of nicotine, is in your system. If this evidence is found, you will likely be classified by the company as a smoker. If you lied on your application, you may be denied coverage or see a surcharged rate.

Any tobacco use will typically be clear, whether from cigarettes, pipe smoking, chewing tobacco, vaping or cigars. The blood test results will likely also show if your system contains THC, which indicates marijuana use. Any of these can indicate that you belong in the smoking category, where you’d be subject to higher premium rates.

In addition to requiring an exam, your potential insurer will probably review your existing medical records and medical history for clues to help them determine risk. Your medical records are likely to contain information on your smoking history.

Even if you have recently quit smoking, there may be remnants of nicotine in your body. Generally, insurers want you to be nicotine-free for at least one year before you are considered to be a non-smoker.

Best types of life insurance for smokers

The best life insurance for smokers will depend on their specific needs for the policy. Smokers may be eligible for many different life insurance policy types. Although you may pay more than a non-smoker would, you'll likely be able to find more than one company that will write you a policy. Speaking to a licensed insurance agent may help you determine which policy type is best for your individual needs. Here are some commonly offered policy types you may be eligible for:

• Term life insurance: The simplest and cheapest kind of life insurance, term life insurance lasts for a specific number of years — usually 10, 20 or 30 — and includes a death benefit paid out if you pass away during the policy’s term. After the term is over, there is no other benefit or payback. This is generally the most affordable life insurance for smokers.
• Whole life insurance: A whole life insurance policy is permanent coverage that will remain in force as long as you pay the premium. In addition, a portion of your premium will be put into a cash value component that you can draw from once a certain amount has accumulated. Whole life insurance is designed to guarantee a death benefit payout, as long as premiums are paid, so it's typically one of the more expensive types of life coverage.
• Guaranteed issue insurance: Guaranteed issue insurance is a unique type of permanent life insurance policy that does not require a medical exam or health screening. It is generally available to individuals between the ages of 50 and 80. If you are a smoker or have an existing health condition, this may appeal to you, though coverage limits are usually capped around $25,000. Your premiums will not be based on your smoking behavior but will instead take into account your age, gender and the amount of coverage you would like. The caveat with this type of life insurance is it can typically be more expensive than medically underwritten life insurance for a smoker in generally good health.

What happens if you lie on a life insurance application about smoking?

It’s never a good idea to lie on a life insurance application. If you lie on your life insurance application and your insurer discovers the misinformation, your application may be denied. An insurer could also withhold the death benefit from your beneficiaries if the lie is found upon your death.

Insurers have several ways in which they may determine the validity of the information provided on your application. First, the life insurance smoker test that is part of the medical exam will indicate nicotine use. Your insurer may also scrutinize your medical records, past life insurance applications and even your social media feeds. Life insurance companies might also use the Medical Information Bureau to verify risk factors listed on your application.

Since there are multiple sources that may indicate to your insurer that you use nicotine products, it is imperative to be honest on your application, even if you only use tobacco occasionally. If your use is sporadic, you may still be able to qualify for non-smoker rates, but even a minor lie on your application may lead you to be turned down for coverage.

The cost of life insurance for smokers

Applicants who smoke cigarettes are almost always going to see a much higher price for insurance coverage than healthy non-smokers. However, it pays to shop around since every insurer has its own policies and procedures, and some may be more lenient toward smokers than others. If you are turned down by one insurance company, don't assume that you will be unable to find coverage elsewhere. You may benefit from working with an independent agent who sells policies for a range of carriers. Comparing quotes for different policy types and coverage limits may help you identify the cheapest life insurance for smokers.

What if you quit smoking?

Quitting smoking is a good idea for many reasons, but it can be challenging to do so. If you have plans to quit in the future, you should still consider purchasing a policy now so that you can protect your loved ones rather than risk being without coverage if the worst happens.

If you smoke and have a policy but later quit, you may be able to ask your insurer for a re-evaluation at that time. If a new medical exam shows you to be nicotine-free, your insurer could be willing to change your risk class, ultimately lowering your cost. Note that most insurers require you to be tobacco-free for 12 months before they will consider reclassifying you for non-smoker rates.

Whenever you reapply for life insurance, consider waiting to cancel your policy until your new one is approved and officially activated. It would be unfortunate for you to first cancel your policy and later find out you weren’t approved for a new one, leaving you uninsured.

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