The value of not smoking
When it comes to life insurance, it pays to quit smoking -- but do you realize just how much you could save?
This post comes from Aaron Crowe at partner site Insurance.com.
If counseling, known health risks and being hassled by your family aren't enough to get you to stop smoking, then consider the high price of cigarettes and how quitting smoking can affect your life insurance quotes.
A smoker in New York, the state with the highest average retail price for a pack of cigarettes at $9.11 when all of the taxes are added, would save $3,325 a year by not buying a pack a day, according to pricing information from the Campaign for Tobacco-Free Kids. Along with possibly extending your life by quitting, you could buy a lot of life insurance each year at nonsmoker rates with that extra cash. To help quantify exactly how much, we researched some life insurance quotes.
Trading cigarettes for insurance
According to our research, a 40-year-old nonsmoking man with about $3,325 to spend on life insurance could buy a $2 million 10-year term life insurance policy for an annual premium of $3,269. A $1.1 million term life policy for 20 years would cost $3,145, and a $650,000, 30-year term life insurance policy would cost $3,280 per year.
The deals are even better for women, who can buy more coverage for the same premium or less. A 40-year-old woman could get a 10-year term policy at $2.25 million in coverage for $3,068 per year, a 20-year term at $1.4 million for $3,229, or a 30-year term policy at $850,000 in coverage for $3,273.
Putting cigarette money toward life insurance can also add up in Missouri, which has the cheapest price for a pack of cigarettes at $3.93. Not smoking a pack a day equates to $1,434 saved per year.
A 40-year-old man could buy an $850,000 10-year term policy for $1,434 per year, $450,000 in term life for $1,334, or $250,000 in a 30-year term for $1,273.
The woman of the same age in Missouri could buy $1 million in a 10-year term policy for $1,400 per year; $550,000 in a 20-year term for $1,330; or $350,000 in a 30-year term for $1,322 per year.
Those figures assume you'll remain a nonsmoker and will continue banking the savings from not buying a pack of smokes each day, and that you'll qualify for a nonsmoker rate from your life insurance company. Post continues below.
A lot of people want to quit smoking, with 68.8% of American adult smokers saying they want to quit and 52.4% saying they tried to quit within the past year, according to a new survey by the national Centers for Disease Control and Prevention.
The savings for a nonsmoker are significant, with life insurance prices one-third of what a smoker pays, according to figures compiled by Glenn Daily, a life insurance consultant in New York City.
A 35-year-old preferred nonsmoker, for example, would pay $725 to $800 per year for a 20-year term life insurance policy with $500,000 worth of coverage, Daily found, while a preferred smoker would pay $1,965 to $2,600 per year for the same policy -- more than three times as much. A "preferred" client is someone in very good health.
Actuarial tables used by insurance companies show a six-year lower life expectancy for that same 35-year-old smoker versus the nonsmoker, he said.
Smokers pay higher prices for whole life insurance, but not triple the price they pay for term insurance, Daily found. Still, it's about 20% more.
Proving you quit
Smokers who have quit can ask their life insurance companies to lower the rates on policies they've already purchased, but it can require some work, says Deborah Becker, a State Farm agent in Wisconsin. Someone older than age 40 with a $1 million life insurance policy must repeat any health tests, such as blood, urine and other medical tests, to determine that the person has quit smoking, Becker says.
For State Farm, the non-tobacco rate won't go into effect until after the insured has been smoke-free for a year. Customers aren't tested periodically for nicotine and aren't asked to verify that they're still nonsmokers after a life insurance policy takes effect, she says.
Lying about being a nonsmoker when you apply for a life insurance policy is a bad idea, Becker says, because if you die, and medical records show you smoked, the insurance claim could be denied.
More on Insurance.com and MSN Money:
How to quit?
1. Recognize you've got the most addictive substance known running through your brain and the rest of your body.
2. Understand that leaving nicotine behind may well be the most difficult thing you'll ever do, bar none. You'd better want to not be a smoker for serious reasons that go far beyond saving money or pleasing a spouse. If you're really serious about quitting, you know what they are. No one else has to know. Why you're an addict, and why you want to not be one is your business alone.
3. Whenever your first smoke usually is, begin to quit by not having one then. Wait until your second one is lit, then have your day's first and smoke your brains out.
4. A week later, whenever this new-first-smoke is lit - DON't. Wait until your usual third one, then have your day's first smoke and smoke your brains out.
5. Back off the day's starting smoke, one smoke at a time, in one-week increments. If you're serious about quitting, you'll see in a month or so that you really can live just fine with these later and later start times.
6. When you're down to starting with the day's first smoke (then smoking your brains out) in the evening, at the time when the last one of the day used to be lit, you're ready . . .
7. . . . to wake having already finished your last smoke. If you're serious, it won't matter if there's still some cartons, or some packs, or even an open pack of smokes, in the house.
Many people have "The Dream" for five or more years after quitting. In "The Dream," you're doing ordinary things and you see you're having a smoke; you're disappointed that you started again, you feel sad.
Then you awake, feeling like you're coming out of some kind of super-realistic nightmare -- and realize that NO! you haven't started smoking again!. The feeling is so good it's almost worth the nightmare to experience that feeling.
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