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Life insurance for smokers

How smokers can (almost) get non-smoking premiums for their life insurance policy, temporarily! Through some innovative uses of Canadian life insurance policy provisions, we can show consumers who qualify at smoking premiums can temporarily get premiums that approach those of nonsmokers. 

First some background:

Who qualifies as smoking premiums?

It’s important to realize that qualifying for smoking premiums is based on life insurance companies’ definitions and not whether you believe you’re a ‘smoker’ or not. The life insurance companies don’t pass judgement, they simply have a set of criteria and you qualify or not.
If you have smoked or used tobacco in any form at all in the past year, then you will qualify at smoking premiums.
Pipe, cigarillo, and large use almost always qualifies at smoking premiums, though in rare instances we may be able to find a company that will qualify you at nonsmoking premiums (call us to discuss).

Smoking premiums will roughly double your life insurance premiums. Again, it’s not a judgement, it’s just mortality and statistics. If they could offer the insurance at lower premiums, they would.

Be forthright, clear, and fully disclose

Failure to disclose anything that might qualify you at smoking premiums can – and likely would- mean that your death claim would be denied. It’s best to deal with the concerns head on, and the good news is, below I’m going to show you how you can substantially offset the higher cost of life insurance for smokers – almost to the point of nonsmoker premiums.

Marijuana smoking

Recreational marijuana smoking with most life insurance companies in Canada today will qualify you at non-smoker premiums. Usage above that level, or usage that results from medical conditions may impact your premiums.

OK, tell me how to save money.

The first assumption we need to make is that you expect to quit smoking in the next couple of years, and stay as a non-smoker for one full year. And we assume you are looking for a term 20 or term 30 policy.

By default, you might purchase a term 20 policy. Then in a couple of years request reconsideration and drop your premiums down to nonsmoking premiums. So here’s what your premiums would look like for a 40 year old Male smoker, $500,000:
Years 1-2: $130/month
Then re-qualify at nonsmoking premiums:
Years 3-18: $45/month.

That’s what you would typically do. But we’re not going to do that. Instead, we’re going to recommend a term 10 policy at smoking premiums (substantially cheaper than the term 20 initially). Then re-qualify at nonsmoking premiums in 2 years and at the same time use the exchange option to jump to a term 20. Here’s what your premiums look like now:

Years 1-2: $68/month
Years 3-20: $54/month

You’ve saved over $60/month for the first two years of your policy. 

The exchange option is key here. This option, in some term life insurance policies, allows you to switch from a term 10 to a term 20 or term 30 without any medical evidence. That’s what allows us to recommend a term 10 instead of a term 20 initially, then use the exchange option to jump to a term 20 once you quit smoking – saving substantially in the meantime.