Premiums: The Insurance Company’s Perspective
When it comes to life insurance premiums, insurance companies consider a variety of factors that determine the average life expectancy of the policy holder, and the resulting risk of issuing such coverage. No other factor has quite the effect on life insurance premiums as does smoking. As a smoker, your chances of becoming ill and prematurely dying as a result of smoking are greater than those of non-smokers, thereby causing your rates to be higher. Insurance companies take these factors into account when setting their rates. Why? Because studies have shown that smokers become ill more often and have a lower immune systems, thereby causing them to be more susceptible to certain illnesses than a non-smoker. Smokers also have a higher probability of premature death due to lung cancer, heart attack, emphysema, severe asthma, and stroke. A 50-year old male smoker has a 46% probability of dying prematurely, versus a 43% probability of the same non-smoker. Although 3% may not look like a big difference, it is when you’re on the receiving end of premature death. Looking at it another way, a 50-year old male smoker has a life expectancy of 78 years, versus 84 years of the same male smoker.
Life Expectancy and Premature Death of Smokers
- A 50-yr old male smoker has a life expectancy of 78 years, with a chance of premature death at 46.35%.
- A 50-yr old male non-smoker has a life expectancy of 84 years, with a chance of premature death at 43.47%.
- A 50-yr old female smoker has a life expectancy of 81 years, with a chance of premature death at 49.41%.
- A 50-yr old female non-smoker has a life expectancy of 87 years, with a chance of premature death at 47.21%.
Source: John Hancock Life Expectancy Data
A survey of the top 25 carriers in the nation revealed that men pay an average of 38% more than women for the same coverage, and that’s not even taking smoking into account. This is because men are at a greater risk of cardiovascular disease, various cancers, and accidental injuries that make them more risky to insurers. The average life expectancy of an American man is also three years less, on average, than a woman’s, meaning the insurer takes on a greater risk of being more likely to pay out on a man’s policy. Add smoking to the equation and, on average, the premiums rise to more than three times as much as non-smokers for the same policy.
A non-smoking 40-year-old woman, for example, pays a yearly premium of $310 for a $250,000 term life policy. However, if she were to smoke, the premium increases to $973. That’s 3.14 times more, or $663 year more than a non-smoker!
Quit smoking and continue to be smoke-free for two years, and your premium will likely go down. But just remember, if you state that you don’t smoke in order to obtain low premium rates, and you die of smoking-related disease or illness, insurers can deny your policy payout. The process of applying for a term life insurance policy generally requires a life insurance medical exam that verifies the information provided by the applicant (height, weight, blood pressure, etc.). In order to identify tobacco users, most insurance companies administer a test that measures the body’s level of a byproduct of nicotine in the urine or saliva, so it’s better to be up front about smoking. In the long run, it’s not about saving money on premiums, it’s about providing your family with the security of a life insurance payout should you die.
Sample Term Life Insurance Quotes
We analyzed term life quotes for a male and female smoker and non-smoker who are applying for a $250,000 preferred life insurance policy. These results are for sample purposes only, and should not be relied on as an actual life insurance quote.
Tobacco User vs. Non-Tobacco Users
- 30 Year Old, Male Non-Smoker: $288
30 Year Old, Male Smoker: $787
Result: 2.734 times higher for a smoker
- 30 Year Old, Female Non-Smoker: $211
30 Year Old, Female Smoker: $546
Result: 2.59 times higher for a smoker
- 40 Year Old, Male Non-Smoker: $386
40 Year Old, Male Smoker: $1501
Result: 3.889 times higher for a smoker
- 40 Year Old, Female Non-Smoker: $310
40 Year Old, Female Smoker: $973
Result: 3.14 times higher for a smoker
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