Why Smokers Should Consider Term Life Insurance? Last updated on December 1, 2019
Individuals that are smokers will pay more for life insurance than a a non-smoker. Companies who sell life insurance policies typically use a blood test or urine test to to determine if you smoke or are using a type of tobacco product. Nicotine found in your system causes smoker rates to be applied.
Two Types of Smoker Rates
Insurance companies typically have two types of smoker rates and sometimes three. One smoker rate is called a preferred rate. A second smoker rate is standard rate and a third rate is a tobacco rate. The type of smoker rate that is applied is based on your current status.
A preferred rate is typically applied to individuals who may only smoke occasionally but are otherwise maintain good health. Individuals will need to have low cholesterol levels, suitable body weight and have a good medical history. This type of rate can be up to 20 percent or more lower than a standard rate.
Standard Smoker Rate
A standard smoker rate is applied to individuals who smoke on a continual basis. They may also have a high cholesterol level and be overweight. A BMI table is used to compare height and weight to average characteristics. Standard rates will be applied if an applicant does not meet these standards.
A tobacco rate is applied to individuals that do not smoke but use a tobacco product. This type of rate is lower than standard rates and most premium smoker rates. If you use tobacco but do not smoke, ask the insurance agent to see if a tobacco rate is available.
Smokers that want to obtain a life insurance policy may want to consider a term policy. This policy still requires a health exam and will have smoker rates applied. However, term life insurance policies do not contain any additional benefits beyond the death benefit. Other types of policies will have a component for a cash value or a dividend. These are benefits that make a term life policy a less expensive option.
Policies that Offer a Cash Value
Policies that offer a cash value or dividend component are a type of permanent life insurance. When this type of insurance is purchased it will provide benefits for the life of the applicant. Term life insurance will only provide protection for a specified term. Most term life insurance policies can be purchased that have a term ranging from 10 years up to 30 years.
Obtain quotes for a term life insurance policy from a local agent. You can choose to use an independent agent or a captive agent. Captive agents are exclusive to only one insurance company. When you see an independent agent quotes from multiple companies are available. Compare policy quotes from a variety of companies to compare the cost for the death benefit that is available.
Life insurance companies typically consider one to two years as the period an individual will need to be smoke free to obtain a preferred rate or even a non-smoker rate. However, when a policy is required the only option that provides the lowest cost will be a 10-year term life insurance policy.
One way that you can lower the cost for a term life policy is to combine it with other policies. When an automobile and home policy are with the same insurance company an addition of a life policy may give you an additional discount. The discount is typically applied to the automobile and home policy you are able to use to reduce the cost of the life insurance policy.