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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?

By MSN Money Partner Nov 16, 2011 1:10PM

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:

12Comments
Nov 16, 2011 4:21PM
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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.

Nov 16, 2011 10:53PM
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 I have not had a smoke in four days. I started when I was 12 years old. A pack of Marlboro's was .42 cents back in 1978.  The last pack I bought cost $5.20  Have tried every thing to quit smoking. This time I am using an E Cig which use's Nicotine Vapor. It's working very well too. My goal is too reduce my nicotine cartridges down monthly. This will tapper me off of the Nicotine addiction with more control.  For 33 years I have been a slave to this nasty habit. I watched my father die of lung cancer in 97. Still did not put the dam things down. This time it's for real and for good. Four days ago no more cigarettes. Six months from now, NO MORE NICOTINE!!!
Nov 17, 2011 2:46AM
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The people I have known that quit 
cold turkey, are now reaping the rewards, by becoming employable, smell so much better, clothes are not ruined, automobile has a a higher trade in value, more money for things they really need, so many other things that become positive.
Nov 16, 2011 10:28PM
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Quitting is difficult but extremely rewarding in physical, financial and psychological ways.  After 35 years of smoking, and attempting to quit numerous times-I decided I had to quit in order to afford my college-aged child's car insurance.  What I did differently this time is I allowed myself to have an occasional cigarette, when the stress or craving got to be too much.  Over time, I noticed they lost their affect, and the last one I had made me sick to my stomach-just like the first one I had so many years ago.  I still think of having a cigarette at times, but the memory of getting sick washes the craving away.  To those who wish to quit-keep on trying, you'll get it right someday!

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I smoked for 40 years and I sure wish I had the money back that I spent on them.When I quit almost 3 years ago I found that what I miss about smoking is the taste.It takes a lot of will power not to pick up a cigarette from my kids that are old enough to smoke.I know as a result of all those years of smoking I have COPD.My fault that I have it.I figure that in the almost 3 years since my wife and I quit we have saved about $4000 per year,as we were smoking about 3 packs per day.In a about 3 years of not smoking I would have saved enough to buy a brand new car and pay cash for it.
Nov 17, 2011 4:08AM
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toughest thing to give up. I smoked for 37 years camel and kools highest nicotine smokes you can get. good luck to all . I have not had a smoke in 13 yrs and don't dream about it anymore. the patch worked for me . highest level they made.
Nov 17, 2011 10:23AM
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My husband at 54 is a die hard smoker and it costs $100.00 a month for a 10 year term life insurance policy worth $100,000.00. I am 50 years old, a non smoker, and my policy costs me $28.00 a month for a 10 policy worth $500,000.00.
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I started smoking at 14 years old, smokes were 3 packs for a dollar then.  I quit when it was rumored that smokes were going up to $1.00 a pack. 1982 was a long time ago but I have never regretted going cold turkey to stop this habit.
Nov 17, 2011 3:04PM
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It has been 2 years, 4 months and 16 days since my last cigarette after smoking for 42 years, but who's counting.Smile I gave them up because of the cost, over $2200/year. I still needed something else to keep me off them so I created an inner child who was the actual smoker, not me. I then had to regain parental control of my child and had to keep telling him NO!, he can't have a cigarette. Those internal tantrums were Hell but I've succeeded in staying off cigarettes for this long. I know it sounds goofy, but it worked and continues to work. A lot fewer internal tantrums, but he does whimper every now and then.

Nov 17, 2011 4:54PM
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can we please just outlaw tobacco? why is something that has decades of research showing how harmful it is still legal? the govt spends millions a year on ads to stop people from smoking, when a simple bill would make it illegal .Oh , could it be the billions of tax revenue it generates that lines their pockets. what was i thinking, money is far more important than the health of the citizens.
Nov 17, 2011 5:26PM
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Cold Turkey is my way. The only way you can if you can be honest with yourself. 22 days. You can do it. I smoked for 25 years. Quit for 15 years. Smoked for 5 years. 22 days off. I will live to see 81. Good luck to you. I breath so much easier when I'm not a smoker. Good luck to you and God's speed.
Nov 17, 2011 5:20PM
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Outlaw smokin'. Then only outlaws would be smokin'.
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