Smokers Are 57% More Likely To Cancel Their Life Insurance

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Posted 29th January 2021 by Chris Reed

Shocking stats show that smokers are 57% more likely to cancel their life insurance policy than non-smokers. These figures released by Protect Line are from a dataset covering the whole of 2020.

“This shocking revelation causes us real concerns” says co-founder and director David Brewer. “We are a business that is passionate about helping customers through difficult times. We are investing in understanding why we are seeing this behaviour from consumers.”
 
Life insurance premiums are based on your age, health, lifestyle and smoking status. Mr Brewer said, “Smoker’s premiums are often twice those of non-smokers. Our service helps to find the most competitive price available for our customers but ultimately all insurers treat smokers in a similar way.”
 
“The pay-out rate of life insurance claims is extremely good. The main reason for claims not being paid-out is due to non-disclosure (where information given to an insurer is incorrect or missing). We have always carefully explained this to our customers as we want their families to get the money paid out from their policy.” The latest figures from the Association of British Insurers confirm Mr Brewer’s thoughts, as their latest figures show that 98.3% of protection claims were paid out in 2019.
 
Mr Brewer continues, “The issue is that many insurers treat vape and e-cigarette users the same as those who smoke cigarettes or tobacco. People who have switched to vaping see it as a healthier choice and do not expect to see the same price increase as a smoker would – it can seem unfair and unjust to those actively trying to improve their health and lifestyle.”
 
Out of the 13 insurers on Protect Line’s insurer panel, the majority ask questions like this on their applications: Have you smoked or used any nicotine replacement products in the last 12 months?
 
Some insurers go further and ask about smoking within the last 5 years; even smoking one cigarette during this period can result in an increase in price. It’s not just current smokers that get a higher price, but recent smokers too. A recent report by Action on Smoking and Health found that there were an estimated 3.6 million people vaping in Great Britain in 2019 compared to 7.2 million smokers in the UK in 2018.
 
Could the increased price for vape and e-cigarette users be contributing to the larger cancellation rate for smokers? If this is true, are these people then taking out new insurance policies? If so, are they still disclosing their vaping to the new insurance provider? Or are they forgoing life insurance all together?
 
“We hope that anyone who has to cancel their policy gets covered again before it is needed. We know how much of a difference life insurance pay-outs make to grieving families. This is the reason we are passionate about helping customers to ensure they disclose all the relevant facts in their application.”
 
It is clear from the data produced by Protect Line that smokers are far more likely to cancel their life insurance. It is still unclear why this is or if these people are restarting their cover again at a later date.

There’s hope on the horizon!

According to the ONS (Office of National Statistics), there were an estimated 485,000 smoking-related admissions to hospitals between 2016 and 2017. That’s more than 1,300 per day. On average, smokers also see their GP 35% more than non-smokers. They also suffer greater rates of heart problems, including heart attacks, lung cancer and high blood pressure. These costs add a great burden to the NHS which is already overloaded.
 
The good news is that in September 2019, Public Health England announced that adult smoking rates had dropped by 2.2% between January to July 2019. 2.2% may not sound like much, but it’s equivalent to 200 less smokers per hour!
 
Public Health England also currently runs a campaign called Stoptober. The campaign is designed to target smokers and highlight the benefits of “breaking up”. This campaign has supported over 1.9 million people on their journey to quit smoking to date. If a smoker can remain smoke free for 28 days, they are 5 times more likely to quit for good.
 
Stoptober’s free support currently includes:
  • A Stoptober app
  • Facebook Messenger bot
  • Daily emails
  • A personal quit plan
  • Stoptober online communities
This support offers a great change compared to past tactics of adding more tax to cigarettes and tobacco. Individuals that want to make a positive change now have a government-funded way of accessing the help that they need.
 
If you’re interested in getting involved in Stoptober 2021 there are resources already available on the Stoptober section of the PHE website.

How does smoking affect life insurance?

The health-related consequences of smoking have been clearly communicated over many years of public campaigning. The financial cost of smoking has also been increasing but very few people know what the impact to their life insurance premiums is likely to be.
 
Most life insurance companies will ask a question in their application to establish if you have smoked in the last 12 months to 5 years (dependant on the insurer). If you have smoked cigarettes, tobacco, e-cigarettes, vapes or used nicotine-replacement products during this period, the insurer will classify you as a smoker.
 
If you have not smoked (or used any nicotine replacement products) within the last 12 months, but have smoked within the last 5 years you may still find large differences in prices between insurance companies. Using a knowledgeable broker like Protect Line could save you thousands of pounds over the duration of your cover.

Should I cancel my policy if I stop smoking?

Firstly, congratulations! Remember that non-smoking premiums are typically half those of smoking premiums. Before you cancel, it is worth checking a few things first:
  1. A few innovative insurers will now allow you to revert to non-smoking rates once you’ve been smoke-free for at least 12 months (you may have to prove this with a test or sign a declaration).
  2. Has your health changed since you took out your policy? If so, a new policy may work out to be more expensive. Make sure you get a new quote and a policy accepted before cancelling your previous policy.
  3. How old is your policy? Age is another huge factor in the cost of your cover. It’s worth taking the time to compare quotes with a broker like Protect Line before deciding if you’re going to cancel your cover.

Does second-hand smoke affect life insurance?

Second-hand smoke (or passive smoking) is mostly invisible and odourless. According to the NHS, it contains a lethal cocktail of more than 4,000 toxins and irritants. This means that even careful smokers could still be putting people close to them at risk.
 
Vaping or smoking e-cigarettes does not create smoke in the same way as smoking. Research is still ongoing in this area, so it’s not currently clear how the vapour produced from these newer products could affect the user or those around them.
 
As of 2021, no life insurance company asks about second-hand smoke. Underwriting questions are constantly changing and being updated, so there is no guarantee that insurers will not ask this question in the future.
 
Still unsure? Check out our Ultimate Guide to Life Insurance
Protection plans with no investment element will have no cash-in value at any time and will cease at the end of the term. If premiums are not maintained then cover will lapse.
Critical illness plans may not cover all definitions of a critical illness. The definitions vary between product providers and will be described in the Key Features and Policy Document if you go ahead with a plan.

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