Have you quit smoking? Have you told your Life Insurance Company?
Many Canadians are paying smoker premiums after they have quit smoking
Have you quit smoking in the last couple of years? Do you own life insurance that you bought while you were still a smoker? If so, you are probably like so many ex-smokers in Canada that are paying too much for their life insurance.
In fact, life insurance companies are collecting millions of dollars each year in premiums they are not entitled to.
Smoker status can be changed to non-smoker status on insurance policies
It doesn’t matter if you are insured for life or health insurance, even disability insurance – all can be changed to non-smoker premiums once you have quit smoking. The rules differ between insurance companies, but you should be able to reduce your premiums to a non-smoker life insurance policy.
For some insurance companies you have to not only make a declaration that you are now a non-smoker, you also have to answer a series of medical questions to prove you are still in good health. This might include doing a urine or blood test to verify your non-smoker status and other common illnesses. This is definitely the stricter type of insurance company that only awards non-smoker premiums to their healthy ex-smokers, and keep their unhealthy ex-smokers paying the original smoker premiums when they bought the policy.
Other insurance companies are a lot less strict. They will allow you to change from a smoker to a non-smoker on your insurance policy with a simple declaration of now being a non-smoker. Your current health condition does not play a part in whether or not you can reduce your premiums. This is a much better company to deal with when you are buying your life insurance policy if you are a smoker (your life insurance broker can tell you which companies are more favourable for smokers switching to non-smoker status – I don’t want to negatively single out any particular insurance company in this article).
Does non-smoker vs. smoker premiums save a lot of money?
You can save thousands of dollars once you’ve quit smoking by reducing your insurance premiums to non-smoker rates. Let’s look at three examples (all based on the most competitive Term 20 life insurance rates in Canada today):
Age 35 Man, $500,000 Term 20 Policy
Smoker premium = $87.75 per month (Assumption Life)
Non-smoker premium = $39.02 per month (RBC Insurance)
Total savings over 20 years = $11,695
Age 45 Woman, $500,000 Term 20 Policy
Smoker premium = $138.65 (RBC Insurance)
Non-smoker premium = $60.53 (RBC Insurance)
Total savings over 20 years = $18,749
Age 55 Man, $500,000 Term 20 Policy
Smoker premium = $718.20 (Assumption Life)
Non-smoker premium = $290.70 (Assumption Life)
Total savings over 20 years = $102,600
As you can see, the cost for life insurance certainly increases as we age, but smoker premiums go through the roof with age. A 55 year old person can save over $100,000 simply by being a non-smoker vs. a smoker.
How to qualify for non-smoker rates as an ex-smoker
I would recommend informing your insurance company as soon as you qualify as a non-smoker. A smoker can qualify as a non-smoker once they have gone 12 months without any form of tobacco or nicotine products. Smoking even one cigarette during this time will disqualify you from getting non-smoker rates. Also, smoking cessation products like The Patch or nicotine gum are considered nicotine products, so you will have to be 12 months without using these products also.
Once you have officially qualified as a non-smoker, contact your life insurance broker or agent or call the insurance company’s customer service department directly. Inform them of your new status as a non-smoker and ask to complete forms immediately to reduce your insurance premiums.
If you start smoking again your premiums will NOT go up again
If you have legitimately qualified as a non-smoker and had all your insurance policies reduced in premiums to non-smoker rates, those new premiums are fixed even if you took up smoking again.
Insurance companies try to limit the number of relapse smokers for getting non-smoker rates with the 12 month qualification period. But once they award non-smoker premiums to you, they cannot go back and change the contract. The new premiums are contractual and non-negotiable by the insurance company. This means if, for some reason, you took up smoking again years later your non-smoker life insurance premiums would stay low and not increase.
Stop overpaying on your life insurance if you’ve quit smoking
If you’re having difficulty getting the life insurance company or your insurance broker/agent to help you make the switch to non-smoker rates, maybe we can help. Our brokers at Life Guard Insurance can look after your insurance policies and process any necessary paperwork to reduce your smoker premiums to non-smoker rates. Just contact us today.
The article was written by +Mitch Reynolds. If you found this article interesting or it made you think, please feel free to share your comments below. Liking us on Facebook, giving us a +1 on Google or Tweeting this article about saving money on insurance premiums once you have quit smoking would also be very much appreciated.