Smokeout: How much life insurance your cigarette money could buy

By Aaron Crowe Posted : 11/15/2011

cigarettes on top of dollar billsIf counseling, known health risks or being hassled by your family isn't enough to get you to stop smoking during the Great American Smokeout Nov. 17, then consider the high price of cigarettes and how quitting smoking can affect your life insurance quotes.

Let Insurance.com help you find affordable life insurance now.

A smoker in New York, the state with the highest average retail price for a pack of cigarettes at $9.11 when all of the taxes are added, would save $3,325 a year by not buying a pack a day, according to pricing information from the Campaign for Tobacco-Free Kids. Along with possibly extending your life by quitting, you could buy a lot of life insurance each year at non-smoker rates with that extra cash. To help quantify exactly how much, we researched some life insurance quotes.

Trading cigarette money for life insurance

According to our research, a 40-year-old non-smoking manwith about $3,325 to spend on life insurance could buy a $2 million 10-year term life insurance policy for an annual premium of $3,269. A $1.1 million term life policy for 20 years would cost $3,145, and a $650,000, 30-year term life insurance policy would cost $3,280 per year.

The life insurance deals are better for women, who can buy more coverage for the same premium or less. A 40-year-old woman could get a 10-year term policy at $2.25 million in coverage for $3,068 per year, a 20-year term at $1.4 million for $3,229, or a 30-year term insurance policy at $850,000 in coverage for $3,273.

Putting cigarette money toward life insurance can also add up Missouri, which has the cheapest price for a pack of cigarettes at $3.93. Not smoking a pack a day equates to $1,434 saved per year.

A 40-year-old man could buy a $850,000 10-year term policy for $1,434 per year, $450,000 in term life for $1,334, or $250,000 in a 30-year term for $1,273.

The same aged woman in Missouri could buy $1 million in a 10-year term policy for $1,400 per year; $550,000 in a 20-year term for $1,330; or $350,000 in a 30-year term for $1,322 per year.

Those figures assume you'll remain a non-smoker and will continue banking the savings from not buying a pack of smokes each day, and that you'll qualify for a non-smoker rate from your life insurance company.

A lot of people want to quit smoking, with 68.8 percent of American adult smokers saying they want to quit and 52.4 percent saying they tried to quit within the past year, according to a new survey by the Centers for Disease Control and Prevention.

The savings for a non-smoker are significant, with life insurance prices one-third of what a smoker pays, according to figures compiled by Glenn Daily, a life insurance consultant in New York City.

A 35-year-old preferred non-smoker, for example, would pay $725 to $800 a year for a 20-year term life insurance policy with $500,000 worth of coverage, Daily found, while a preferred smoker would pay $1,965 to $2,600 per year for the same policy -- more than three times as much. A "preferred" client is someone in very good health.

Actuarial tables used by insurance companies show a six-year lower life expectancy for that same 35-year-old smoker versus the non-smoker, he said.

Smokers pay higher prices for whole life insurance, but not triple the price they pay for term insurance, Daily found. Still, it's about 20 percent more.

Proving you quit to your life insurance company

Smokers who have quit can ask their life insurance companies to lower the rates on policies they've already purchased, but it can require some work, says Deborah Becker, a State Farm agent in Wisconsin. For someone over age 40 with a $1 million life insurance policy, they must repeat any health tests they've done, such as blood, urine and other medical tests to determine that they've quit smoking, Becker says.

For State Farm, the non-tobacco rate won't go into effect until after the insured has been smoke-free for a year. Customers aren't tested periodically for nicotine and aren't asked to verify that they're still non-smokers after a life insurance policy takes effect, she says.

Lying about being a non-smoker when you apply for a life insurance policy is a bad idea, Becker says, because if you die but medical records show you smoked, the insurance claim could be denied.

 

 

Related Articles on Insurance.com

0 Responses to "Smokeout: How much life insurance your cigarette money could buy"

No Comments

What do you think? You can add a helpful comment to this page by filling out the form below.
Just looking for a quote? Click here
 
 
 

Quote & Compare

Want to bundle home and auto insurance for potential discounts?

Thanks,
you're all set.

One of our newsletters
should arrive in your inbox
soon - keep an eye out for it!

Give your feedback