Smokers pay more out than simply the price of cigarettes

Monday, July 19, 2010

According to a recent study undertaken by Moneysupermarket.com, the online financial services comparison site, smokers are paying greatly increased premiums for life cover. While smoking is becoming increasingly expensive due to high taxes, Moneysupermarket.com is claiming that people could also save thousands in insurance costs by quitting.

The study which the site undertook looked at various life insurance policies provided by a range of suppliers in order to collate a broad reach of data for the research. Moneysupermarket.com undertook the study to mark the three-year anniversary of smoking indoors in public spaces.

In the study, the company took a man of thirty years and calculated how much he would have saved on life insurance, had he stopped smoking at that age. Moneysupermarket came up with a figure of over ten thousand pounds, based on life insurance, critical illness and the cost of cigarettes themselves.

The projected cost savings cannot be completely accurate, as they are calculated based upon predicted growth increases in insurance premiums over a set number of years. However, when the cost of smoking is considered in insurance terms, it makes a significant difference to premiums if people can quit smoking prior to making their application for life insurance.

It takes a full year of being a non-smoker before insurance companies take this in to consideration when pricing premiums. This is because of the risk of lapsing back to the habit. Firms need to be convinced that the insured does not pose an increased risk when it comes to the diseases associated with smoking. In addition, NRT (nicotine replacement therapy) needs to be completely finished before people being insured can be classified as non-smokers.

It’s important to contact your insurance provider if you have been smoke-free for a year or more, as this will have significant long-term impact upon the price of your life insurance policy premiums.