MONEY SAVING TIPS: How to reduce your life assurance premium – stop smoking!

5 February 2021
By Elaine Murphy
elaine@TheCork.ie

Money saving tips

“If you quitting smoking was your New Year’s resolution you could pocket thousands” – says insurer

A smoker could pay anywhere from €6,000+ to €60,000+ than their non-smoking counterpart for life assurance according to figures released today by Royal London. Experts at the leading protection specialist say that many policyholders are unaware of the significant cost savings that can be made on their life insurance premiums if they have given up smoking – with non-smokers benefiting from a reduction in premiums of up to around 50%.

Royal London is highlighting the issue now as this is a time when many smokers make it their New Year’s resolution to give up smoking once and for all and, after the expense of Christmas, they believe it come as welcome news to anyone who has successfully managed to quit since January 2020 or before, that this year their life insurance premiums may be reduced dramatically.

Tony Burke of Royal London in Cork, explained,

“When weighing up the advantages of quitting smoking, we generally think about the obvious health benefits and the cost savings to be gained from not purchasing cigarettes frequently – especially given that, from 2021, one packet is set to cost €14. However, fewer people may immediately think of the significant cost benefit of quitting in terms of the impact it has on life cover premiums. As you might imagine, smokers pay more in premiums for life insurance than non-smokers, due to many damaging health effects, but people may not be aware of just how sizeable the difference can be between the premiums charged.”

Royal London conducted a cost analysis to illustrate the difference in premiums paid between non-smokers and smokers.

Royal London Cost Analysis: Level Term Assurance Life Cover ^

Age Term (years) Monthly premium non-smoker Monthly premium smoker Savings over 25-year term
35 25 €24.58 €44.80 €6,066.00
45 25 €54.78 €115.71 €18,279.00

Royal London Cost Analysis: Specified Serious Illness Cover ^

Age Term (years) Monthly premium non-smoker Monthly premium smoker Savings over 25-year term
35 25 €114.39 €188.45 €22,218.00
45 25 €278.78 €506.72 €68,382.00

Commenting on the cost analysis, Mr. Burke said,

“The figures speak for themselves – showing massive savings for non-smokers when compared with smokers. A smoker turning 35 on their next birthday will pay over €6,000 more in premiums than their non-smoking counterpart for €300,000 worth of Level Term Life Cover over a 25-year term. A smoker turning 45 on their next birthday can expect to pay over €68,300 more than a non-smoker during the course of a Specified Serious Illness policy for €300,000 over a 25-year term. Our experience is that while many people expect that smokers will pay more in premiums; they are surprised how much the cost savings can add up to over the lifetime of the cover.”

Royal London says that anyone considering quitting smoking as their 2021 New Year’s resolution has the added incentive of looking forward to a reduction in premiums next year. To be classified as a non-smoker for insurance purposes you must have not used any tobacco products in the last 12 months, including the use of e-cigarettes and nicotine replacement products such as patches or chewing gum, with no intention to do so in the future. It is possible that your insurance provider may ask you to complete a cotinine test (smoker test). This is a simple test which involves screening a sample of saliva or urine for tobacco use.

Last year the then Minister for Health, Simon Harris, said that the COVID-19 pandemic has made it more important than ever to quit smoking.Smoking impairs lung function and the infectious virus primarily attacks the lungs. Added to that, tobacco is a major risk factor for noncommunicable diseases like cardiovascular disease, cancer, respiratory disease and diabetes. According to a report from the World Health Organisation2 research suggests that when smokers are affected by the virus that they are at higher risk of developing severe illness and death.

Mr. Burke concluded by saying,

“Given the pandemic, more focus than ever has been on our physical health, and with tobacco use being the leading cause of preventable death in Ireland each year3, it stands to reason that those that smoke may make giving up the habit a priority in 2021. Fortunately, the prevalence of smoking in Ireland is decreasing – according to HSE figures4 for the first half of 2020 15.7% of the Irish population smoke, which is down from the 2019 full year figure of 17.1%.5 We are calling on ex-smokers who have successfully kicked the habit since at least 01 January 2020 to go about reaping the financial rewards of their outstanding achievement. If you are a smoker, who is considering quitting, the potential cost savings on your life insurance is another reason to break the habit that you can add to the list.

 “If you’re an ex-smoker since this time last year, we recommend that you get in touch with your Financial Broker who, by assessing your individual needs, will be able to advise you about the potential cost savings for non-smokers. It may be possible for you to avail of cheaper rates and start the New Year by saving money on your insurance policy.”

Sources:

1Department of Health Press Release, ‘Minister for Health welcomes the ban on the sale of menthol flavoured cigarettes and tobacco and urges smokers to quit during the COVID-19 pandemic’ May 2020:

https://www.gov.ie/en/press-release/7aee39-minister-for-health-welcomes-the-ban-on-the-sale-of-menthol-flavoure/

2World Health Organisation statement: Tobacco use and COVID-19, May 2020:

https://www.who.int/news/item/11-05-2020-who-statement-tobacco-use-and-covid-19

3Department of Health, Healthy Ireland Policies, 2019:

https://www.gov.ie/en/policy-information/706608-healthy-ireland-policies/#smoking

4HSE, Smoking Prevalence Tracker 2020 Half Year Infographic, June 2020:

https://www.hse.ie/eng/about/who/tobaccocontrol/research/smoking-in-ireland-2020-half-year-update.pdf

5HSE, Smoking Prevalence Tracker 2019, December 2019:

https://www.hse.ie/eng/about/who/tobaccocontrol/research/smoking-in-ireland-2019.pdf

^ Bestadvice.ie as at 08/12/2020

Age refers to age next birthday. Sum assured in each case €300,000.

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