Tobacco or Not Tobacco – That is the (Life Insurance) Question

Can you find the smoker in this picture?
Michael is having a great day, in the middle of a great month. He lights up a celebratory cigar and grabs a beer. His buddy James won’t light up with him, because James quit smoking almost a year ago, and doesn’t want to touch any tobacco product. So who do you guess is the smoker?

JAMES.

Probably the single most important factor affecting the life insurance rates of otherwise healthy middle aged applicants is tobacco use. If you’ve ever seen a cigarette package, you know that the surgeon general thinks that smoking is bad for your health. Well, life insurance underwriters are certain that it is bad for your life expectancy. Since insurance carriers price their products based on the scope of the risk they are taking, rates for smokers are significantly higher than rates for non smokers. For a 45 year old male in preferred health, if a non tobacco rate for a 20 year term is as low as $400 per year, then a preferred tobacco rate could be 3 times the price at over 1200 dollars per year.

It is pretty universal amongst main line life insurance carriers that anyone who has smoked cigarettes within the past year is considered a smoker. So our friend James might want to hold off on applying for a policy until its been more than a year since he quit. But what about Michael? He must be a smoker, he’s holding a stogy. Not necessarily. Somewhere along the line a carrier realized that lots of non smokers find themselves holding a celebratory cigar every once in a while. (More often when you are at the stage of life when all of your friends are becoming parents or grandparents.) Most occasional cigar smokers probably don’t even inhale. So most carriers have a cigar smoker’s exception that allows for very limited “celebratory cigars” up to once per month. They all require that your urinalysis has to be completely free of nicotine metabolites (specifically continine). The carriers also require that you are honest and admit to cigar smoking on the application. If you try to hide it and they catch it, you will find yourself denied.

AIG is one of the most forgiving carriers, and will allow up to one cigar per week. If you can limit yourself to one cigar per month, then you can still qualify as a nonsmoker with Banner Life Insurance, Genworth, John Hancock Life Insurance, Trans America and WestCoast Life Insurance. Metlife Investors, is in the middle and draws the line at 4 cigars per year, and West Coast will even treat you as super preferred if you can keep your celebrating down to 6 times per year. None of the carriers are clear whether you need to hold a quality 18 year old single malt scotch in the other hand to demonstrate that the cigar was truly celebratory.

If you quit smoking more than a year ago, most carriers will consider you a nonsmoker, but they still penalize you and constrain which health class you belong in. So if, for example, you quit smoking 37 months ago, you will be treated as super preferred by some carriers, preferred by most, and even standard by a few. So make sure you and your agent review the tobacco underwriting guidelines before you apply. Here are the tobacco guidelines for a few major carriers:

AIG Preferred Plus Nontobacco: No tobacco use for 5 years Preferred Nontobacco: No tobacco use for 3 years Standard Plus Nontobacco: No tobacco use for 2 year Standard Nontobacco: No tobacco use for 1 year

Banner Life Preferred Plus Non-Tobacco: no use of tobacco or nicotine-based products in the past 36 months. Preferred Non-Tobacco: no use of tobacco or nicotine-based products in the last 24 months. Standard Plus Non-Tobacco: no use of tobacco or nicotine-based products in the last 12 months. Standard Non-Tobacco: no use of tobacco or nicotine-based products in the last 12 months.

Genworth Preferred Best: No use of nicotine or nicotine substitutes in the last 5 years Preferred: No use of nicotine or nicotine substitutes in the last 3 years Select: No use of nicotine or nicotine substitutes in the last 2 years Standard: No use of nicotine or nicotine substitutes in the last year

ING Super Preferred Nontobacco: No tobacco use for 5 years Preferred Nontobacco: No tobacco use for 3 years Select Nontobacco: No tobacco use for 2 year Standard Nontobacco: No tobacco use for 1 year Preferred Tobacco: (PT) Less than 2 packs per day in the past 3 years.

John Hancock Super Preferred Nontobacco: No tobacco use for 5 years Preferred Nontobacco: No tobacco use for 3 years Select Nontobacco: No tobacco use for 2 year Standard Nontobacco: No tobacco use for 1 year Standard Non-Smoker: No cigarette use within the last 12 months and either: You can still qualify as a standard non smoker if you only use non cigarette tobacco or nicotine products, and preferred non smoker if you only use the rare ceremonial cigar.

Lincoln Benefit Life Preferred Elite: No tobacco use for 5 years Preferred: No tobacco use for 3 years Standard Select Nontobacco: No tobacco use for 2 year Standard Nontobacco: No tobacco use for 1 year

MetLife Investors USA Elite Plus: No tobacco use for 5 years Preferred Plus: No tobacco use for 5 years, but up to 4 cigars per year Standard Plus: No tobacco use for 2 years Standard Nontobacco: No tobacco use for 1 year

Prudential Preferred Best: no tobacco use in the last 5 years. Preferred Non=Tobacco: no tobacco use in the last 3 years. Non-Smoker Plus: no cigarettes in the last 12 months. Non-Smoker: no cigarettes in the last 12 months.

Transamerica Preferred Plus: no tobacco/nicotine for 5 years. Preferred Non Smoker: no tobacco/nicotine use for 2 years. Standard Plus: no tobacco/nicotine use for 2 years.

West Coast In order to qualify for non-tobacco use rates, the proposed insured must not have used tobacco or nicotine products in any form (gum, patches, etc.) within one year prior to the policy date that the application was written. For Super Preferred, however, the time frame is five years. All current positive cotinine (nicotine) results will be treated as tobacco usage. Changes to nicotine policies will be considered after 2 years if the insured was a user at inception of the policy. If the insured had already quit prior to the time that the application was written, West Coast Life will consider a reduction after one year.


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2 Responses to “Tobacco or Not Tobacco – That is the (Life Insurance) Question”

  1. Limited Medical Plans says:

    Wow! I am not sure how an occasional cigar smoker is different than an occasional cigarette smoker. I am sure we all know people who may smoke a cigarette on an occasional basis, why wouldn’t that be considered the same way?