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Stoptober: Smoking and e-cigarettes can double the cost of life insurance

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Written by: Rebecca Goodman
25/10/2022
Smokers pay on average twice the amount of non-smokers when it comes to life insurance, data reveals.

Even those using e-cigarettes, which allow people to inhale nicotine in a vapour rather than smoke and are considered less harmful, could be paying more than non-smokers.

That’s because most insurers see smokers (whether they smoke cigarettes or vapes) as a similar risk. We found just two – Canada Life and Zurich – differentiated between cigarettes and vapes when pricing life insurance policies.

The price hike is because insurers believe smokers are more likely to make a claim on a policy because of the increased health risks from smoking.

There are around 6.9 million smokers in the UK, a figure that has been steadily declining, according to data from Action on Smoking and Health (ASH).

Yet while the number of smokers is going down, those using vapes has risen. The number of people using e-cigarettes, such as vapes, has risen by 8.3% this year to 4.3 million people. This is the highest rate ever recorded and the majority of people using vapes (57%) are ex-smokers.

Smoking has increased during cost-of-living crisis

During the current financial crisis, people have also been smoking more. Around half of all UK smokers say they’ve smoked more since the cost-of-living crisis began, according to figures from NiQuitin.

It says 62% smoke more when stressed and 64% worry nearly every day about the current crisis. Two thirds also say they’ve become more conscious of the cost of cigarettes during the current squeeze on finances.

It comes during ‘Stoptober’ a month-long NHS campaign to encourage people to give up smoking. It says those who quit for 28 days are five times more likely to give up for good.

Quitting smoking could save thousands per year

Not only does smoking increase the risk of illnesses and death, it is also expensive. The cost of buying cigarettes is an annual average of £2,000 per smoker, according to ASH, but it’s also pushing up the cost of insurance.

We asked the insurer LifeSearch to provide some example figures for life insurance policies. In every case, smokers pay significantly more than non-smokers.

The average cost for £250,000 of level-term life insurance cover for a healthy 30-year old, with no previous health problems, is £9.21 per month for a policy. For someone who smokes, this increases to £16.24, a rise of 76%.

For a 40-year old, the price example given was £18.62 or £41.92 for a smoker, a rise of 125%.

Costs rise again for someone aged 50, with a non smoker likely to pay £47.66 and a smoker paying £115.50, a rise of 142%.

It’s not just life insurance either, the cost of critical illness cover and income protection rises for smokers. This is because the risk of someone claiming on a policy also increases.

How many cigarettes do you need to smoke to be a smoker?

When you apply for life insurance you will be asked how many cigarettes you smoke. Insurers usually ask for a figure within the last 12 months and it’s important to be as honest as possible.

Whether you have one or two on a night out or three or four packets a week, smoking will increase your risk of making a claim and insurers need to know exact figures when they analyse your risk levels.

If you lie, there is a potential your claim could be rejected.

If you stop smoking and you have a life insurance policy you will also need to tell your insurer as your premiums could become cheaper.

Cigarettes versus vapes

If e-cigarettes are less dangerous than cigarettes, you may think they would result in lower premiums for protection policies.

Yet most insurers class them in the same boat, so the price you pay is still likely to be significantly more than a non smoker, even if you use e-cigarettes.

There are only a few insurers, such as Canada Life and Zurich, which differentiate between cigarettes and vapes. Some insurers, such as Aegon, also offer a lower price if someone is using a product where zero nicotine is being consumed, yet this isn’t the case with the majority of providers.

Alan Richardson, spokesperson at LifeSearch, says: “Smoking roughly doubles the cost of life insurance, critical illness cover and income protection.

“Insurers will usually treat vapers as smokers, especially where any nicotine is still being consumed. If there is zero nicotine some insurers may consider lower pricing depending on the circumstances.”

The price someone pays depends on lots of different things, from their age and health conditions to their job and amount of cover, so the only way to know is by asking for a quote.

What do the insurers say?

We approached some of the big life insurers to see where they stand when it comes to cigarettes and vapes. This is what they told us:

Aegon: “We class vaping exactly the same as someone who smokes, so a vaper will get smoker rates. This is on the basis that they both contain nicotine.

“There are the occasional vapers that use non-nicotine vaping products, if this is the case, and they haven’t used any nicotine products for 12 months or more, then they can have non-smoker rates.”

Aviva: “Aviva currently asks whether applicants for life insurance use tobacco or nicotine replacement products such as electronic cigarettes and we treat those that do as smokers. They therefore receive smoker premium rates.”

Beagle Street: “Currently, Beagle Street does not have any differentiation between smoking cigarettes, vaping (regardless of nicotine content) or using nicotine replacement products.

“If any of these have been used within the last 12 months, they result in a customer receiving smoker terms.”

Canada Life: “We do differentiate our pricing in this area, with lower mortality and morbidity risk applied for vaping.”

LV=: “At application stage, smoker rates would apply to anyone who declares they’ve smoked, vaped, used e-cigarettes or other nicotine replacement products in the last year.

“For existing customers, if they stop smoking / using the nicotine replacement products for a period of 12 months, they can apply for non-smoker rates.”

Royal London: “We would expect electronic cigarette use to be disclosed as a nicotine replacement product and therefore should be treated much in the same way as a smoker i.e. where we become aware of use in the last 12 months we would treat on smoker rates.”

Vitality: “When applying for life insurance, we ask people to declare their smoking status which includes the use of cigarette and nicotine replacement products. We do not currently differentiate between the use of any nicotine product.

“We do, however, consider anyone who has not used any form of nicotine product within the past 12 months as a non-smoker, and will offer non-smoker rates as a result.”

Zurich: “Customers who vape or use e-cigarettes with nicotine are treated the same as a smoker when looking at life insurance premiums.

“Those who vape without nicotine, and who don’t use any other form of tobacco or nicotine, are treated as non-smokers.”

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