How Does Tobacco use Affect Life Insurance Rates?

Whether you smoke it, chew it, get it from a patch or take a drag from an electronic device, tobacco use can be costly to, not only your health, but your wallet.

Tobacco use is the leading preventable cause of death in the U.S., killing at least 443,000 each year from 2000 to 2004, according to The American Cancer Society. Thirty percent of all cancer deaths and 87 percent of lung cancer deaths are attributable to tobacco use. It is also a leading cause of cardiovascular and respiratory disease.

Whenever you light up, you expose yourself to more than 4,000 chemicals contained in a single cigarette, according to the ACS. More than 60 of those chemicals are known to cause cancer. Some of the more lethal chemicals include cyanide, benzene, formaldehyde, methanol, ammonia and acetylene (fuel used in welding torches).

If you think electronic cigarettes are safer — think again. The U.S. Food and Drug Administration says electronic cigarettes also have cartridges filled with nicotine, flavors and other chemicals that are known to be toxic to humans. A recent FDA report pointed to diethylene glycol, nitrosamines, anabasine, myosmine and B-nicotyrine as sources of toxic chemicals found in e-cigarettes.

One chemical in particular, diethylene glycol, is an ingredient of antifreeze and a lubricant used in automobile brake fluid. In comparison, one cartridge of electronic cigarettes is estimated to have 18 mg of nicotine, while a pack of tobacco cigarettes has 20 mg, but the verdict is still out as to whether there are smoking cessation benefits to in switching to an electronic cigarette. Even hookah smoking, which is gaining popularity with the younger generation, may provide less of a nicotine count overall, but has a high concentration of carbon monoxide.

Insurance companies and underwriters determine rates for smokers and other tobacco users by following the latest studies and mortality statistics provided from health organizations. A 2007 study published by international medical journal, Tobacco Control, found that moderate to increased use of tobacco shortened the user’s lifetime significantly.

“Average cigarette smoking reduced the total life expectancy by 6.8 years, whereas heavy cigarette smoking reduced the total life expectancy by 8.8 years,” Tobacco Control reported. “The number of total life-years lost due to cigar or pipe smoking was 4.7 years. “

When it comes to life insurance, the greater your risk of mortality, the higher your premium. For this reason, smokers pay more. How high those premiums can get depends on what you smoke, how often you smoke and whether you are otherwise healthy. Rick Bergstrom, of Bergstrom Consulting in Seattle, says smoking especially affects term policy rates.

“When it comes to term policies, a preferred smoker (free of health conditions) would normally be rated almost double that of a preferred nonsmoker,” said principal of The Producer’s Advantage Inc., an insurance broker based in Bingham Farms, Mich., Bob Bennethum.

When it comes to whole life insurance, a smoker may be rated even more.

For instance, Bennethum says, a 45-year-old preferred nonsmoker with a $500,000 universal life policy and a lifetime guarantee would pay about $3,550 a year for the policy. “The same policy would cost about $6,400 for a preferred smoker,” he says.

If a smoker also has an illness aggravated by smoking, such as emphysema or coronary artery disease, they would be rated higher for smoking, higher again for the illness and higher again for the combination of the two, said principal of Tilford Consulting in Chicago, Bill Tilford.

Some insurance companies will offer standard nonsmoker rates to the occasional cigar or pipe smoker, but only if they smoke about once a month or less. A handful of companies that target rural areas will provide those same rates to those who chew tobacco, Tilford says.

But for the most part, regular smokers and other nicotine users will be rated either preferred smoker or standard smoker, no matter how they get their nicotine fix. The smoker’s age and the length of time they’ve been smoking could also make a difference between the two rates.

“Chewing tobacco is not as noxious as cigarette smoking, but you still are putting dangerous chemicals in your system,” said Bennethum. “There are very few companies to my knowledge that will allow nonsmoker rates.”

He says those who use a hookah pipe are smokers, as are those who wear a nicotine patch or chew nicotine gum.

“You may not [be] using the patch or gum socially or recreationally, but even if you are trying get yourself off the nicotine habit it counts as tobacco use,” Tilford says.

If you are involved in a smoking cessation program, it may be a good idea to let you life insurance agent know. Especially if you would like to convert your term life policy into a whole life policy. Depending on how long you have been successful in the program, this could result in lower rates.

Marijuana users would most likely get a smoker’s rate, and depending on use, be rated for drug use as well, said principal of ARH Consulting in Eastland, Tex., Anna Hart. And even though electronic cigarettes may not emit second-hand smoke, they do contain nicotine, which also deems the person a smoker.

Hart says most insurance companies require a urinalysis to test for a metabolite of nicotine called cotinine in their system. Depending on how much an individual smokes, the cotinine can be present for up to 20 days. If someone abstains for several weeks to “beat” the test, they would be considered misrepresenting their history and the policy could be rescinded.

There are ways smokers can get reduced premiums. Bennethum says no medical test is needed for policies with death benefits of less than $250,000, although Bergstrom points out the premiums for these policies are usually higher.

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