E-Ciggs the safer alternative to smoking? More pricey though….

 Smoking, including e-cigarettes, increases cost of life insurance by up to 65 per cent – typically £26 extra per month

·         Young people ditching smoking, with only one in 20 having smoked in the last 12 months

New analysis of data by MoneySuperMarket reveals that smoking, including e-cigarettes, increases the cost of life insurance premiums by as much as 65 per cent – in cash terms, an average of £26 per month, totalling a substantial £312.84 each year.

The health risks that come from smoking are undeniable, which is why premiums are higher.  But life insurance is an essential purchase for anyone with dependants, especially if they have a mortgage, which is a compelling financial reason why smokers should seriously consider ditching the habit.

Analysing quoted premiums for life insurance policies between January and April 2018, it was found that, on average:

  • Smokers pay £26.07 more for decreasing term insurance with critical illness cover (CIC) included
  • Smokers pay £16.59 more for level term cover with critical illness cover included – 48 per cent more than non-smokers.

With decreasing term insurance, the amount the policy would pay out falls over its duration, the idea being that this sum reduces in line with an outstanding mortgage debt that is being repaid with a capital and interest loan. This helps cut the premiums compared to level term insurance.

The amount that would be paid out by a level term insurance policy remains the same for its duration. This more expensive option is useful for those who want to provide additional money to clear other debts and to provide funds for dependants’ living costs.

With their long-term effects on health yet to be agreed, e-cigarettes are viewed in the same way as normal cigarettes for life insurance purposes. It is also worth bearing in mind that insurers don’t distinguish between daily, occasional or social smokers – if you’ve smoked in the past 12 months, you could end up paying more.

According to MoneySuperMarket data1, the highest proportion of people who have smoked within the last 12 months are aged between 36-45 (30 per cent), closely followed by 46-65 at 28 per cent. This is in stark contrast to under 25s, with only one in 20 having smoked in that time period (5%).

Aside from existing health conditions and whether the applicant smokes, age is a clear factor that affects the cost of life insurance. Analysis2 shows that monthly premiums skyrocket when taking out a policy over the age of 45 – as much as double the average price.

< 25

25-29

30-35

36-45

46-65

Decreasing term

£15.89 CIC

£4.44 no CIC

£22.67 CIC

£5.18 no CIC

£31.29 CIC

£6.63 no CIC

£57.48 CIC

£11.32 no CIC

£124.49 CIC

£25.77 no CIC

Level term

£12.60 CIC

£6.23 no CIC

£15.67 CIC

£7.05 no CIC

£21.66 CIC

£9.19 no CIC

£36.67 CIC

£15.10 no CIC

£83.09 CIC

£35.01 no CIC

Kevin Pratt, consumer affairs expert at MoneySuperMarket, commented: “No one likes to think about their own premature death, but anyone with dependants needs to plan for the worst. Life insurance is there to provide financial support by clearing outstanding debts and, with some policies, providing funds to meet living expenses. The impact on families where no cover is in place can be devastating.

“Clearly, paying for something you need but hope never to use is frustrating, which is why it makes sense to give up tobacco and hopefully cut the cost of your premiums. Even if you’ve already got life insurance, it’s worth giving up and seeing if you can negotiate a lower premium with your insurer or get a new, cheaper policy elsewhere.

“You’ll also improve your health, which has to be a bonus.”

For British homeowners to find out what life insurance policy is best for them, MoneySuperMarkethas launched a range of new guides with tips on how to save money when searching for a policy.

EJ Ward

EJ manages all news content for Panda Radio in the UK, and prepares news for other stations in our radio group. Experienced in news reporting, and specialising in breaking news and political reporting, as well as on-the-ground reporting from conflict and hostile environments and major UK incidents. EJ is always on the hunt for hard news, specifically content relating to the UK, Europe and China. Find him on Twitter @EJWardNews