Smoking significantly increases the cost of life insurance, often leading to premiums that are more than double, and sometimes even triple, what a nonsmoker would pay. This substantial increase reflects the higher health risks associated with tobacco use, which directly impact an insurer's risk assessment.
The Impact of Smoking on Life Insurance Premiums
Life insurance companies categorize smokers as a higher risk due to the well-documented health issues linked to tobacco use, such as various cancers, heart disease, and stroke. These conditions can lead to a shorter life expectancy, increasing the likelihood of an insurer having to pay out a death benefit. Consequently, smokers face much higher annual premiums.
Here's a look at average annual rates for term life insurance, illustrating the significant difference between smokers and nonsmokers:
| Age | Gender | Average Annual Rate for Nonsmokers | Average Annual Rate for Smokers | Increase for Smokers | Percentage Increase |
|---|---|---|---|---|---|
| 20 | Male | $216 | $745 | +$529 | 244.9% |
| 30 | Female | $187 | $641 | +$454 | 242.8% |
| 30 | Male | $221 | $785 | +$564 | 255.2% |
| 40 | Female | $282 | $1,157 | +$875 | 310.3% |
As shown in the table, the annual cost for smokers can be hundreds of dollars more than for nonsmokers, representing an increase often exceeding 200% and, in some cases, over 300%.
Why Smokers Pay More
The primary reasons life insurance premiums are so much higher for smokers include:
- Elevated Health Risks: Smokers are at a significantly higher risk of developing serious, life-threatening diseases, including lung cancer, emphysema, chronic bronchitis, heart attacks, and strokes.
- Reduced Life Expectancy: On average, smokers have a shorter life span compared to nonsmokers, meaning the insurance company is more likely to pay out a claim sooner.
- Increased Claims Probability: From an insurer's perspective, a smoker represents a higher probability of an early claim, which translates to a greater financial risk for the company.
Potential Savings for Quitters
For individuals who smoke but are considering quitting, there's good news: you can significantly reduce your life insurance costs. Most insurers will reclassify you as a nonsmoker, and lower your premiums, if you can demonstrate that you have been tobacco-free for a certain period, typically 12 consecutive months. This change in classification can lead to substantial savings over the life of your policy.
For more information on life insurance for smokers and quitters, you can explore resources like NerdWallet's guide on life insurance for smokers.
