Smoker vs Non-smoker Life insurance Rates

Published: January 30, 2018

What you’ll pay for life insurance if you smoke.

As a smoker, you will pay more for life insurance than a non-smoker, sometimes as much as double or even triple the premium price. Because you smoke you could develop a critical illness, for example, heart disease, cancer and stroke. These illnesses put you at a higher risk to the insurance company for potentially lodging a claim, thus your premiums will be more expensive to account for this risk.

If you’re a smoker or have recently quit smoking and wondering how you can get more affordable life insurance rates, then comparing similar policies from top life insurance companies is a great place to start.

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Smokers can get affordable life insurance

On average, 23% of Australians are classified as smokers, even if they don’t actually smoke anything (i.e. nicotine gum or patches). But only 8% of smokers have life insurance. Surprising considering that smokers are three times more likely to die prematurely than non-smokers.

One possible reason for this might be the false assumption that smokers can’t get affordable life insurance.

While every insurance company is different, generally you can get life cover as a smoker and with a little research, you can find affordable life insurance from some of the leading companies in Australia.

How much more is life insurance if you are a smoker?

Smoking has a large impact on your life insurance rates because the insurer is taking on a bigger risk. To balance this risk, your policy will cost more. A 40-year-old non-smoking male taking out $1million worth of life cover can expect to pay as little as $42.19 per month, whereas a smoker’s premiums can increase by as much as 150% to $102.90 a month (as of January 2018).

A non-smoking 35-year-old female might only pay $19.43 a month for $750,000 worth of cover as opposed to $41.64 for a woman of the same age that smokes (Jan 2018).

Below is a comparison of the top 5 life insurance companies and their monthly premium price for $1million worth of cover for a 40-year-old male living in NSW.

Smoker vs non-smoker rates for top life insurance companies

Source: Lifeinsurancedirect.com.au (January 2018)
Company Non-smoker Smoker
Accelerated Protection Health Sense $46.11 $110.39
Priority Protection Vitality $42.19 $102.90
Insurance with On Track $52.92 $129.54
Elevate Insurance Solutions $48.49 $118.63
OneCare $57.34 $128.57

Take note: The cost of your premium also depends on various other factors, not just whether you smoke or not. Life insurers will also review your age and gender, BMI, overall health, the state you live in and the amount of cover you’re applying for.

Why smokers pay more for life insurance

Smoking increases your risk of developing various ailments and will thus lead to higher premium rates than those of a non-smoker, who might otherwise have exactly the same risk factors as you do.

For example, if two reasonably healthy men of the same age and similar family histories both apply for a life insurance policy at the same company for the exact same level of cover and one is a smoker, then the non-smoker will get lower premiums.

Tobacco smoking is associated with an increased risk of:

  • Cancer
  • Heart disease
  • Stroke
  • Diabetes
  • Renal disease
  • Eye disease
  • Respiratory conditions such as emphysema and bronchitis

When are you considered a smoker?

A ‘smoker’ isn’t only a chain smoker in the life insurance context, the term also refers to recreational users and social smokers. Generally, you are considered a smoker if you have smoked one or more cigarettes in the past 12 months, or if you smoke e-cigarettes, and/or if you are taking nicotine replacement products, like patches and gum, within 12 months of quitting smoking.

Are you still a smoker if you vape?

Yes, generally a life insurer will consider you a smoker if you vape. When you vape, you are essentially inhaling a liquid that contains nicotine which has been converted into a vapour. Nicotine can have harmful effects and is highly addictive, and as such, many insurers consider it a form of smoking.

When are you considered a non-smoker after quitting?

For smoking to no longer affect your premium price, you typically need to be completely smoke-free for at least 12 consecutive months. After 12 months, most life insurers will generally consider you a non-smoker and offer standard rates.

However, you might want to read the insurer’s product disclosure statement (PDS) to determine how many months they require you to be smoke-free.

How does life insurance know if you smoke?

Life insurance companies will generally ask whether you are a smoker during the application process, as well as what form of smoking you partake in and how frequently. No matter what tobacco-related products you are using, it’s important that you answer truthfully and say ‘yes’. If you don’t, it can be seen as insurance fraud.

It is your duty to fully disclose your smoking status when applying for life insurance, even if you only have one when you’re out with friends. Your insurer will then be able to provide you with an accurate calculation of your premium.

What will happen if I lie and say that I’m a non-smoker?

Let’s imagine that you have a cigarette once in a while and honestly don’t consider yourself a smoker. You ticked ‘no’ on your life insurance application form. Now, it is claim time. At this stage, your insurer will:

  • Use your application form to request information from Medicare and the Pharmaceutical Benefit Scheme (PBS);
  • Communicate with your doctors to get a comprehensive view of your medical history before you applied for your policy; and
  • Use social media and review your online profiles, checking for any inconsistencies in your application information, such as images of you with a cigarette in your hand while at a social gathering.

If they discover any evidence that you were dishonest during your application, then your claim could be denied or only paid out partially.

Becoming a smoker after getting life insurance

If you have gone through the life insurance application process, answered every question honestly, and been paying premiums, and then later decide to take up smoking, you generally don’t have to inform your insurer that you’ve started smoking. However, it is best to consult your PDS.

8 Ways smokers might be able to make their cover more affordable

As a smoker, there are several ways you can lower your life insurance rates and potentially save hundreds on premiums every year.

Freeze your premiums:

If your insurer offers this option, you can freeze your premiums at its current amount. Essentially, your cover amount will reduce each year so your premiums don’t increase.

Trim your policy:

Consult with a financial adviser or your insurer to determine if there are any unnecessary paid for options on your policy which you can remove.

Go Super:

Your premiums might be cheaper if you take out life insurance through your superannuation.

Reductions:

You can lower your premiums by decreasing the amount of cover you have.

Combined:

Select insurers might offer cheaper premiums if you take out a combined policy, such as trauma cover combined with life cover.

Quit:

If you quit smoking for a minimum of 12 months, including refraining from nicotine replacement products, then your premiums will generally be lowered to non-smoker rates.

Change your premium style:

Remove automatic CPI increases:

You can request that your insurer remove the automatic CPI increases, which helps keep your policy benefit in line with the rate of inflation.

Cheapest life insurance rates for smokers

Just because you’re a smoker it doesn’t mean you can’t get cheap life insurance cover. Every insurer has a different process and different rates for smokers. For example, some companies might give non-smoker ratings to an applicant having a celebratory cigar.

Take your time to review and compare leading life insurance companies and find the best match for your specific situation.

To help you in your search, you can fill in the form above and get instant prices on screen from top life insurance companies, comparing benefits and features side-by-side.

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Ask an Expert?

2 Comments

  • Kathryn Murley |

    My husband has been a non-smoker for 14 months now. He is 58 years old.

    If he applies for a life insurance policy, how do we know that the insurer will pay out the life insurance in the event of his death (given that he has genuinely been a non-smoker for over 12 months)?

    How do I prove that he has been a non-smoker for the required time period?
    How does the insurer investigate this if they know he has been a smoker in the past?

    • SPECIALIST
      Anneke Van Aswegen |

      Hi Kathryn,

      Great question, thanks for asking.

      Smoking vs non-smoking life insurance rates is quite different. While the cover for smokers and non-smokers are generally the same, smokers will usually pay more in premiums.

      If your husband hasn’t smoked at all in the past 12 months prior to applying for life insurance he could qualify for non-smokers premiums. When applying your husband must fully comply with his duty of disclosure and truthfully state his smoking status. Insurers generally do not investigate the validity of the information you provide during the application stage.

      However, your husband’s smoking status will be investigated at claim stage, as the insurer will usually write to his doctors to gain access to his medical records.

      We would suggest he informs his doctor, during his next appointment, the date he had stopped smoking so that his smoking status will be recorded in his health records.