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 nonsmokers. 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 nonsmoker.

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

How do life insurance companies classify smokers?

Each life insurance company will have its own method of determining classification for smoking and nicotine users. Although smoking cigarettes is almost always going to lead to someone being assigned to a smoking risk class, other forms of tobacco and nicotine usage may differ based on the company and the usage. 

For example, cigars and chewing tobacco may be eligible for nonsmoker rates. Someone who occasionally has a celebratory cigar or chews tobacco once in a while may be classified as a nonsmoker 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. Vaping, on the other hand, is almost always considered the same as cigarette use.

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 use any form of tobacco, nicotine or marijuana. Life insurance companies often treat smokers and nicotine users as high-risk policyholders since they 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.

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

Lying in an attempt to get the cheapest life insurance for smokers won’t help. If you lie on your life insurance application, the insurer will likely find out and assign you smoker/nicotine rates anyway. Furthermore, after your policy is activated, the insurance company still has a two-year window — called the contestability period — when they can review your application and challenge any claims if misrepresentation is discovered, meaning your beneficiaries may be denied death benefits.

Insurers have several ways to determine the validity of the information provided on your application. Tobacco, nicotine, cotinine and THC would likely be discovered through blood, urine and saliva tests taken during your life insurance medical exam. In addition to requiring an exam, the insurer will likely review your prescription history and possibly your medical records. They even have the option of reviewing your social media feeds for clues to help them determine risk.

“It’s rare that someone would be declined for life insurance just for a positive cotinine test. It’s more likely they would see a surcharge/increased rate,” states Joy MacArthur, a life insurance underwriter with over a decade in the industry, “That said, if the nicotine use wasn’t disclosed, most carriers generally won’t be willing to reconsider for non-nicotine rates if there is a positive cotinine result after the client failed to disclose any nicotine use.”

She adds, “A decline is more likely for positive THC if THC use wasn’t disclosed, though that has been changing with the increased legalization of THC use across the country, with some carriers simply assigning nicotine rates for a positive THC.”

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 nonsmoker.

Best types of life insurance for smokers

The best life insurance for smokers will depend on their specific needs for the policy. Smokers/nicotine users may be eligible for many different life insurance policy types. Although you may pay more than a nonsmoker 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. This is generally the most affordable life insurance for smokers.
• Whole life insurance: A whole life insurance policy is permanent coverage designed to remain in force your entire life. In addition, a portion of your premium will be put into a cash value component that you can draw from once it 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.
• Universal life insurance: Universal life insurance offers lifelong coverage with a cash value component, similar to whole life insurance, but offers additional flexibility. Universal life policies allow you to adjust your death benefit and premium payments as your budget and life circumstances change. For example, you can make higher premium payments than your policy requires early on, allowing you to build cash value quicker. Or if you need to reduce spending, you may be able to decrease your premium payments.
• Guaranteed issue insurance: Guaranteed issue insurance is a permanent life policy available to individuals aged 50-80 without a medical exam, though coverage limits often max out at $25,000. Your premiums will not be based on your smoking behavior but will instead take into account your age, gender and coverage amount. 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. Guaranteed acceptance life insurance policies also typically come with a graded death benefit, which means if you pass away from a nonaccidental death within the first two years of the policy, your beneficiary will only receive a refund of your paid premiums, not the full death benefit.

The cost of life insurance for smokers

Applicants who smoke cigarettes or use nicotine products are almost always going to see a much higher price for insurance coverage than healthy nonsmokers. However, it pays to shop around since every insurer has its own policies and procedures, and some may be more lenient toward smokers/nicotine users 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 life insurance agent or broker who sells policies for a range of carriers. An experienced agent can help you narrow down companies that will offer the best coverage and compare quotes for different policy types and coverage limits to help you identify the cheapest life insurance for smokers.

What if you quit smoking?

Quitting smoking or quitting the use of nicotine in any form is a good idea for many reasons, but it can be challenging to do so. If you have plans to quit in the future and don’t have life insurance coverage, 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 nicotine- and tobacco-free for 12 months before they will consider reclassifying you for nonsmoker rates. If you have plans to quit, it’s worth asking companies if they have a reclassification program for smokers before applying to avoid having to reapply for a policy to get non-smoking rates.

Whenever you reapply for life insurance, consider waiting to cancel your current 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.

Frequently asked questions