A
common question from people applying for
term life insurance is how smoking will
affect their rates. Smoking is
such a concern that it's typically
listed right in the quoting tool.
Let's look a little closer at how
smoking will affect the outcome of your
term life
enrollment.
Why
is smoking considered when applying for
life insurance
Smoking has a very significant effect on
your term life rates for good reason.
Life insurance is primarily concerned
with mortality rates and risk.
Smoking has been shown to directly
correlate to this risk...especially over
the long term which usually falls under
the range that term life insurance
handles. According to the CDC
(Center for Disease Control), smoking
claims 430,000 lives in the U.S.
Compare this to 41,000 for automobile
accidents, 19,000 for homicides, and
17,000 for AIDS. Approximately 3
million people have died prematurely
since 1980 due to smoking. This is
the type of information that most
interests a life insurance company since
its decision are based on mortality
risk. There are also the other
diseases associated with smoking that
impact mortality risk such as heart
disease, cancer, and cardio-vascular
disease.
The
net effect to this risk is that your
rates will likely be higher for term
life insurance due to smoking and/or
tobacco use.
Are
there differences between types of
Tobacco use?
Yes
and no. Depending on the carrier,
they might differentiate between
smoking, chewing tobacco, and even cigar
smoking. It partially depends on
years of use, how often used, and other
health factors. Conservatively,
it's best to expect a higher rate when
applying for coverage when you use any
tobacco products. You want to plan
your life insurance budget based on
conservative information so you allow
for enough coverage.
Can
stopping tobacco use help?
It
might. Each carrier will have
different guidelines regarding how long
you smoked and how long ago it has been
since you stopped. As a rule of
thumb, a past smoker who has not smoked
in 5+ years might qualify for a
Preferred Plus tier. 2-3 years
would likely be Preferred and finally,
if you have not smoked in the last 12
months, the Standard rating might be an
option. So not only is cessation
good for your health, it can benefit you
financially. The simple
explanation for this is that mortality
risks decline if you stop smoking and
continue down the longer your stay away
from smoking. You can ask a
life
insurance carrier to re-evaluate your
rates after a period of not smoking.
Honesty about smoking on the term life
insurance application.
It's
critical to be honest on your
application regarding smoking history.
The money you save on premium won't mean
much if your policy is jeopardized later
on...especially if the unforeseen
happens and if you have no benefits paid
out. The smarter approach is to
list your accurate smoking history and
then aggressively work to stop smoking
with the intent of re-evaluating your
rates and/or applying again at a better
term life health
class soon after the first policy goes
into effect. Lying on a term life
application is fraud and it defeats the
purpose of getting coverage to begin
with.
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