My father had smoked for much of his adult life until he was 40.
That is until he had me. He told me that seeing the burn holes from his ashes on his white undershirt was the reason he was determined to quit because he didn’t want those ashes falling on his newborn son.
To quit smoking is one of the hardest challenges that many people addicted have to face but the benefits are huge.
Most people understand the health benefits that go along with quitting smoking but many might not know or appreciate the financial savings that goes along with breaking the habit.
One of those savings that you can experience is with your life insurance policy. We have shared in the past the cost of life insurance for smokers. The cost can be anywhere from two to three times what a typical nonsmoker would pay.
Even rates for people that chew tobacco can be expensive, but what happens if you are finally able to kick the habit? Are you still going to have to pay rates as if you are a smoker?
The good news is that if you kick the habit, you also have the potential to save a lot of money in your life insurance but if you are not working with an independent life insurance agent that knows what they are doing, that might not be the case. Let me explain….
Life Insurance For Someone Who Recently Quit Smoking
We recently took a call from a gentleman that had quit smoking 13 months prior. When he initially applied for life insurance, he was able to get with a company that would give him a standard rating even though he hadn’t quit smoking for one year. Many carriers will give you the benefit of the doubt so as long as you actually kicked the habit.
Since he had reached a year of quitting smoking, he was hopeful that he could reduce his rates even more. By the time he came to us, he had already talked to a few different agents and the most recent quote that he was given was a standard plus nonsmoker rate from MetLife with an annual premium of $1109 (see screenshot below). This was the independent agent that he trusted and felt knew what they were doing. Being the wiser, he decided to shop around just to make sure. Good thing he did.
Working With an Independent Life Insurance Agent That Knows Their Stuff
One of the biggest benefits of working with an independent agent is that they should be able to work with dozens of different carriers. But just because they can work with dozens of different carriers isn’t always a good thing if they don’t know the underwriting guidelines for each company. This situation was a case in point example.
Our potential client was quoted a standard plus rating with an annual rate of $1109. This is because MetLife will only give a preferred rating if the individual had quit smoking for greater than five years. I was confident that we do better. Much better.
Right now, the high risk life insurance companies that treat former smokers the most favorably will give you a preferred rating so as long as you quit smoking for a period of one year. Currently, these companies include Nationwide, Minnesota Life, and Principal. You can see their rates below. FYI, these premiums are based on the individual that was applying. He was approximately 40 years old and seeking a $1 million for a 20-year term.
|20 Year Policy for $1,000,000||Principal||Minnesota Life||Nationwide|
|Male||20 Year Policy for $1,000,000||$924.40/YR||$965.00/YR||$1,485.00/YR|
|Female||20 Year Policy for $1,000,000||$767.70/YR||$785.00/YR||$1,065.00/YR|
As you can see from the chart above, just because you can get preferred doesn’t necessarily mean it will be cheaper. Nationwide would actually cost more for him at preferred than Metlife would at standard plus. A good independent agent will do their homework to find this out.
What was cheaper was the two other companies with Principal being the cheapest at $924 per year.
We were able to save the client $185 per year because we knew which carriers would approve him at preferred.
Over the 20 year term that’s $3,700 in savings!
How much Insurance Coverage you need
First you have to choose the best insurance policy to fit your needs. Then you need to calculate your life insurance needs.
Thankfully, it’s easy to do. To start, you need to combine all of your debt. How much debt would you leave to your family? Make sure your life insurance is bigger than that number.
After you’ve got all those debts together, not you need to multiply your paycheck. Not only will your spouse or kids have to pay your debts, but they will still have to pay for monthly expenses. Make sure your plan can replace your paycheck.
Bottom Line on Quitting Smoking
If you’ve quit smoking and are looking for affordable life insurance, it is possible. If you’ve quit for over a year, getting a preferred rating is a cinch with the carriers mentioned above. Please keep in mind that you still have to meet other underwriting guidelines and can’t have any high risk conditions. If you’re seeking a preferred plus rating, you’re looking at least having quit for 1 year.
Each company has a different system for rating applicants that are smokers or used to be smokers, which means you could receive drastically different premiums for the same coverage. Finding the best companies for your situation could mean thousands of dollars in your wallet.