Would quitting smoking affect my life insurance cover?

Published on November 26th, 2020
  Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
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The effect of smoking on your life cover

With every drag a smoker takes they drag both their finances and their health down. Life insurance underwriters look at your health to determine how much cover you can get and what you should be paying in premiums. Smokers are most likely to pay higher premiums as this habit put their lives at risk. However, there is a silver lining for smokers who have quit smoking. Insurance premiums on your life cover are likely to decrease each subsequent year. But this means that you have to avoid any type of smoking for a period of 12 months – 3 years to receive the same rate that non-smokers get. You will have to read your insurer’s product disclosure statement (PDS) to find out how many months they require you to be smoke-free. Taking a short by quitting a few months before you apply for life insurance will not gain you any favours. Some insurers will require that you undergo a medical exam to test if you are smoke-free.

How much do smokers pay on premiums?

Smoking is an expensive habit too keep up once you analyse the cost it takes to spend on a packet of cigarette p.a., but it also impacts your premiums on your life insurance. For example, a male non-smoker who is 50-55 years and takes out a $500,000 life insurance policy will pay a monthly premium of $169. A man of the same age who does smoke who takes out the same policy will fork out an average monthly premium of $343. A female smoker in her fifties can pay 75% more than a non-smoker of the same age. The increase in premiums for smokers affects both young and old as this puts you at a risk.

You could save up to $10,000 if you quit

Quitting smoking a major step that anyone can take, but it is possible. It not only has health benefits, but it can help you save thousands of dollars in return. A study by Nerd Wallet revealed that people who quit smoking saved up to $10,000 (US). It could also reduce your premiums significantly giving you some extra cash to use on building your life insurance policy or elsewhere.

A few things to keep in mind

Quitting smoking means quitting anything that has nicotine in it. Some insurers also include vaping as smoking because the liquid contains nicotine. It is important that you read the fine print on what is consider smoking, and what is the period in which you have to quit smoking to get the benefits of a non-smoker.

Other things to keep in mind is to never lie on your application for life cover. It will be in your best interest to give as much detail as possible in order for you to receive adequate cover. It can also prevent your policy from becoming void. Your medical records or urine exams are most likely to reveal if you are still smoking so it is best to be honest.

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The content on our website is produced by experts in the field of finance and reviewed as part of our editorial guidelines. We endeavour to keep all information across our site updated with accurate information.

Savvy is partnered with Compare Club Australia Pty Ltd (AFS representative number 001279036) of Alternative Media Pty Ltd (AFS License number 486326) to provide readers with a variety of life insurance policies to compare. Savvy earns a commission from Compare Club each time a customer buys a life insurance policy via our website. We don’t arrange for products to be purchased from these brands directly, as all purchases are conducted via Compare Club.

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