Life Insurance for Tobacco Users Basics
Depending on the type of tobacco or nicotine you use, life insurance underwriting can vary drastically from carrier to carrier. I’m talking about cigars, chewing and dipping tobacco, pipe, nicotine replacements (gums, patches, lozenges), and the newer E-cigarettes and vapor cigarettes. There are a few carriers that are more relaxed than others with these different forms of tobacco and nicotine. When looking for life insurance for tobacco users, it is important to find out the details before taking a life insurance application. Usually, the cheapest carrier on a spreadsheet has the most restrictive tobacco and nicotine guidelines.
Instead of asking a client if they smoke cigarettes, ask them if they currently, or in the last 5 years, use any form of tobacco or nicotine (or marijuana). Depending on the type, frequency, and past history, underwriting rates vary greatly from carrier to carrier. This can save a lot of time by hopefully applying to the most favorable carrier the first time.
Life insurers test for cotinine, which is a byproduct of nicotine. Cotinine stays in the system much longer. But there are levels that insurers are comfortable with and can offer nonsmoker rates. These client can test positive for, and admit to, other forms of nicotine and/or tobacco.
For example, a 45 year old male who chews tobacco could get nonsmoker rates. His premiums would be nearly half the premium of a cigarette user. But, 9 out of 10 carriers would view that same client at smoker rates. Knowing what carriers have the most advantageous guidelines for your clients can be confusing. The reason it is important to get this info from the client before taking an application is to avoid unnecessarily high premiums and avoid extra work. That savings in premium could allow your client to get the higher death benefit they need or free up money to get more insurance on the spouse.
Read on to find out more specific details and advice for agents and the general public.
WHY DOES LIFE INSURANCE COST SO MUCH MORE FOR SMOKERS?
Life insurance for tobacco users can vary with the frequency of use and type of tobacco product used. It’s no secret that tobacco use is closely associated with numerous life-shortening illnesses like cancer, heart disease, stroke, chronic obstructive pulmonary disease. According to a New England Journal of Medicine article smokers have an average life expectancy ten years shorter than those who have never smoked. Hence, when seeking life insurance for tobacco users you can expect to pay substantially more than a non-smoker.
Many, if not most companies will offer non-smoker rates after you have not smoked for twelve months. And they may offer preferred rates if you stopped using for three years. Visit our agent portal for a term quote. Companies are constantly changing their guidelines so it is best to shop around to numerous companies if you have stopped smoking for over twelve months.
TYPES OF TOBACCO AND NICOTINE THAT INSURERS ARE CONCERNED WITH
I don’t know of any life insurance companies that will offer anything better than “Preferred Tobacco” rates if you smoke at all (even just an occasional ‘social’ cigarette), or if you have smoked at all in the last twelve months. Preferred Smoker rates can be four times the rate than Preferred Non-Smokers for term insurance and twice the rate on universal life insurance.
If you have not smoked for twelve months, most companies will offer non-smoker rates. And they may offer preferred rates if you stopped using for three years. Companies are constantly changing their guidelines so it is best to shop around to numerous companies if you have stopped smoking for over twelve months.
Cigar Smoking and Life Insurance
Smoking cigars more than once per week will land you in tobacco rates with the vast majority of life insurers. However, there is a very small group of companies that will consider regular cigar smokers and chewers as non-tobacco. They will not offer the best non-smoker classes, but even a standard non-smoker class is substantially better than the best smoker class.
Example: $500,000 twenty year level term for male age 45
|Rate Class||Annual Premium|
|Non-smoker plus for cigar user||$1010|
|Preferred tobacco for cigar user||$2435|
There is good news for those that smoke with a frequency less than weekly. There are a few companies that will consider you for their best rate class if you smoke less than weekly or monthly. You usually have to admit usage and the application and test clean. Testing clean means that no cotinine (a metabolite of nicotine) will show up in your urine sample.
There are life insurers that will treat tobacco chewers and cigar smokers as non-smokers. This means they may be able to get standard non-smoker rates. However, the vast majority of insurers will at best offer Preferred Tobacco rates.
Some life insurers will treat pipe smokers, chewers, and cigar smokers as non-smokers. This means they may be able to get standard non-smoker rates. However, the vast majority of insurers will at best offer Preferred Tobacco rates.
Nicotine patch or gum
A small group of life insurers will treat nicotine patch and nicotine gum chewers as non-smokers. This will also depend on when someone has switched from tobacco to the patch or gum. If someone switched from cigarettes to a nicotine patch less than one year ago they will still be considered a smoker. However, if they switched over one year ago there are a few companies that will consider them for non-smoker rates.
Vape (Electronic cigarettes)
Almost all companies will consider vape users just like regular cigarette smokers. I know of only one exception that may offer a non-smoker class.
HOW INSURERS TEST FOR NICOTINE
Full underwriting with lab tests
‘Full underwriting’ means that the insurers will not only ask detailed questions about your health and lifestyle, but they will also ask for blood and urine samples. These samples get tested for many things such as cholesterol, signs of alcohol or drug abuse, signs of diabetes, and indications of tobacco use.
The urine is tested for cotinine, which is a metabolite of nicotine. People process nicotine at varying rates, however, cotinine is usually undetectable after ten days.
Non-medical underwriting (without lab tests)
Some insurers offer some life insurance products that can be purchased without having to undergo a medical exam or lab tests. Usually performed by the completion of an application and maybe a telephone interview. The insurers will then check multiple sources for additional information about your driving history, prescription drugs and other actions taken by other insurers.
In this case, the insurers are at least partially dependent on the individual to answer honestly about nicotine use. Keep in mind, however, that insurers can still get information that may indicate nicotine usage – such as from your medical records provided by your doctor. Hidden in all the paperwork you signed is a form that allows the insurer to get your medical records. So if it is in your records there is a good chance the insurer will find it.
HOW TO SHOP FOR THE BEST RATES
Although there are numerous online sites that can provide life insurance quotes they don’t usually drill down enough to really determine the rate class that you can expect to get. They tend to provide the best possible rate class regardless of your medical history. A good website that provides ‘unbiased’ term life quotes is https://www.term4sale.com/. This site is as good as any term life site on the web, but it still doesn’t get enough medical information to provide anything more than a ‘best case’ rate quote.
It is probably worth contacting a local independent life insurance agent as they can better assess what the expected rate class will be based on your medical history. Most independent agents have access multiple companies and can shop your case with any or all of them. It is best to provide the agent with honest information about your medications and health history as they can then shop for the best results for your situation.
A note about providing accurate information to an agent
The first thing to keep in mind with an independent agent is that it is usually in their best interest to provide you with the best value so that they may keep you as a customer. With this in mind, I reiterate that It is best to provide the agent with honest information about your medications and health history as they can then shop for the best results for your situation.
Any inaccuracies about your health will most likely be uncovered by the insurance company during the application process. So, if you indicate that you don’t use tobacco and then it subsequently is uncovered that you do use tobacco it will leave the insurance company with a negative impression about your health and candor. Additionally, the information most likely gets reported to MIB. Once MIB has this information any member company will have access to this information, so if you try to apply elsewhere the new company will be made aware
THE BOTTOM LINE
If you choose to use tobacco or any nicotine products you can expect to pay a fair amount more for your life insurance. The good news is that if you quit smoking or using nicotine products you can apply to your current life insurer for a better rate. They will usually require you to provide lab tests at your expense. If you test clean and your health has not changed for the worse They may offer you a lower rate.
Or, you are always free to go back out to the market after you have quit for twelve months and apply for non-smoker rates.