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How Smokers Can Save Money on Life Insurance

By on March 20, 2014 in Insurance, Life Insurance

How Smokers Can Save Money on Life InsuranceIf you’re a cigarette smoker, you’re probably familiar with paying more when it comes to anything related to insurance. Life insurance is no different – you will pay significantly more in premiums if you are smoker, compared to a non-smoker.

Premiums are higher for smokers because smoking is associated with a large number of chronic and terminal illnesses. The list includes cancer – especially lung cancer, stroke, high blood pressure, emphysema and heart disease. This causes life insurance companies to incur earlier benefit payouts on whole life insurance policies, as well as more frequent claims on term life insurance.

The situation for smokers will not improve with the Affordable Care Act (ACA). Even though the new health care bill prohibits rejecting or charging higher premiums for patients with pre-existing health conditions, the one exception is smoking. Health insurance companies will still be required to cover you as a smoker, but they will be permitted to charge you higher premiums as a result.

How to Lower Life Insurance Premiums If You’re a Smoker

If you are a smoker, you’ll typically pay 20% to 25% more in life insurance premiums than a non-smoker will. This can turn a $1,000 annual premium for a non-smoker into $1,200, or $1,250. But there are some steps that you can take that will at least minimize those higher premiums.

Bundle your life insurance with other policies

You can often get a better deal on life insurance if you bundle it with other insurance policies that you maintain. For example, you can bundle your life insurance coverage with your homeowners insurance, your auto insurance, or any business insurance that you maintain.

These bundles may not completely eliminate the higher rate you’re paying for life insurance as a smoker, but they can make it less significant than it otherwise will be. Just the fact that you are bundling your life insurance with other policies should result in lower premiums, even apart from the smoking issue.

Group life insurance policies

The most obvious choice here is employer provided life insurance. Though you may still be charged a higher rate as a result of being a smoker, it will still be less expensive than what you would pay for a private policy.

If you cannot get life insurance through your employer, you can check out other group policies, such as professional associations, trade unions, credit unions, and organizations such as AAA.

Quit smoking!

Many life insurance companies – and health insurance companies to – will lower your premiums if you can quit smoking for at least two years. Some insurance companies, and many employers, offer <em>smoking cessation programs</em> that will help you to quit, and track your progress. Once you pass the required test of time, the insurance company will lower your premiums. They may not be as low as they would be if you’re a non-smoker, but they’ll still be considerably lower than they are now.

Work with an insurance agent or insurance broker

If you are a smoker – or if you have any other significant health conditions – you should always work with an insurance agent or broker, rather than trying to find life insurance on your own.

There are hundreds of insurance companies, and among them are a small percentage that specifically target smokers. They do this because despite the related health risks, 21 – 22% of the adult population are smokers, and that represents a large and profitable market. They will often offer lower premiums than other life insurance companies will for smokers.

Agents and brokers are aware of these companies, as well as those that take a very dim view of smokers. They can steer you toward the smoker-friendly companies and save you a significant amount in premiums. Since insurance companies pay agents and brokers out of the total premium, you will not pay extra for their services.

None of these strategies are meant to imply that you can get non-smoker rates, but you can cut the difference significantly, and that’s always worth pursuing.

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