How Smoking Affected The Cost Of Our Life Insurance Premium

Life Insurance

We all know the health risks of smoking followed by the dent it can put in the budget just to buy cigarettes. Did you also know that it costs smokers more money when they apply for life insurance, like it did for us? Who knew there would be such a significant cost difference for life insurance for a smoker and non smoker as you will later find out. It’s been over a year now that we butted out (January 29, 2102) and are both still smoke-free today. We will always give thanks to all the support along the way from not only each other but external motivation such as family, friends, our family doctor, the pharmacy team and of course The Smokers Helpline.

The Smoking Memory

As time went on smoking became less of a habit for us and more of a memory and now we don’t even think about it. We won’t lie and say that if someone sparks up a smoke that the smell is captivating because it still is. We smoked for quite a long time and every smoker knows that the first inhale is the best of a newly lit cigarette. When I’m at work it no longer bothers me when I’m yapping outside with colleagues and they are having a cigarette. In fact the more I continue to smell it the happier I am that I no longer have this habit. There have been many times over the course of the winter that we both have been thankful to not have to stand out in the cold just to get our fix. Addicting, you bet it was, but breaking the habit was the easy part the hard part is sticking to it.

Benefits of Quitting Smoking

The health benefit was our top priority followed by the monetary gains we would have simply by not having to fork out almost two hundred dollars every month. Over the course of the year that added up to more than a couple of thousand dollars that we willfully just blew away. One motivation to keep living the smoke-free lifestyle is when we see friends who smoke and their constant “need” to have one. We can see how the addiction can take over someone’s life like it did ours. We don’t talk about quitting smoking to those that smoke unless they bring it up. Honestly, when we smoked we knew what we were doing, we’re not idiots and neither are those that are addicted to smoking. I’m sure there are many smokers online who are going to read this blog post and wish that they too could give up smoking today. They can, but they need to have a will to succeed and a desire to live. That’s what came over us, not someone telling us we had to quit. I don’t think we initially set out to become a smoker (I mean, who does?) but now know it was a mistake that did cost us in many ways.

The Financial Advisor

When we initially quit we had our yearly review with our financial advisor whom we told about us quitting smoking and our desire to live a healthier lifestyle. He was just as happy as our doctor was about it and not only from the health benefits aspect. He told us that if we could stay smoke-free for one full year that we could be re-assessed and potentially listed as non-smokers. If accepted they would put us in a new class and a new life insurance policy drawn up. How exciting is that if we can potentially save more money? We both started with life insurance about 4 years ago with a 25 year term life policy just to cover our bases in case something should happen. As long as the house and funeral costs were paid we were happy enough with that. We didn’t need to have millions of dollars in life insurance plus we didn’t have any dependants at the time nor do we today.

This was another motivation and what we needed to continue through not smoking or wanting to pick one up and light it throwing all our hard work down the toilet. It only takes one cigarette to set us back and we knew that so we had to think ahead. It was always in the back of our minds about saving a bit of money in our budget because we are always looking for ways to improve. We had no idea how much we would save so we went on our merry way and waited for one year to pass.

One Year Smoke-Free

One year had passed and we booked our annual meeting with our financial advisor who had all the paper work ready for us to fill out for our new life insurance policy. I’ll admit we said a couple of times that we better get a good reduction in rate with all the paper work we had to fill out again. We were skeptical yet optimistic because we knew that we never cheated, not once. We didn’t have to have any type of testing done although if they required it we would have been more than happy to oblige. In fact we almost wanted them to check because we were so proud of our accomplishment.

Even though the paperwork was somewhat daunting (nothing is as bad after you fill out pages and pages of forms to become a Permanent Resident in Canada) it was so important to make sure that our medical history was accurate and up to date. There’s all those horror stories we hear about people who file a claim for life insurance only to find out something was missing or inaccurate. We didn’t want to be those people so we took the time to make sure everything was correct. They told us that the  underwriters would likely call our family doctor which was perfectly fine with us. We went on our way with the hopes of hearing back soon the results.

Life Insurance and Smoking- The Results!

We received a phone call last week from our financial advisor who wanted to congratulate us on being approved and we are now rated as non-smokers in our new policy. The best part is that the new monthly expense for our budget has gone down so we are no longer paying such high life insurance costs.

Here is the breakdown:

  • To Buy Smokes Approx $196 a month or $2352 a year
  • Smoker Life Insurance Policy: $135.05 for the both of us
  • Non-Smokers Life Insurance Policy: $70.43 for the both of us

Yearly as smokers we paid $1,620.60 to pay for our life insurance policy and the new yearly cost is just about half that amount at $845.16. Over the course of the next 21 years the policy will cost us $17,748.36 instead of what would have been $34,032.60 in premiums. What a huge difference and we were excited to make that change to our life insurance category in the budget. We will take the money that we are saving from our life insurance and put it in our savings account for now. We may just use it as our “rendezvous money” as one of my fans suggests to do with money we don’t spend each month in our grocery budget. That sounds like a plan and that way when we save enough money we can treat ourselves to a trip back to Europe to travel and see family.

Sometimes it’s the small things we don’t think about that add up in a big way for the budget. It truly was a lifestyle change for love, health and money for us. Although quitting smoking is not as simple as it sounds even if we made it seem that way, it’s not. I can only hope that those that do smoke make the decision to quit for their own personal reasons. They may also save money not only from not buying cigarettes but see the cost of their own life insurance policy go down.

Have you quit smoking and received a reduction in your life insurance premium?

What motivates you to stay smoke-free?

You can read our Quit Smoking Series Below

New Start, New Beginning, New Life, Change, Divorce, Seperation

Are you NEW to Canadian Budget Binder?

  • You can Follow Canadian Budget Binder on Twitter  or Facebook and Pinterest.
  • If you have a personal story that you would like to share with the fans please contact me today at canadianbudgetbinder [@] yahoo dot [ca]

Photo Credit: Freedigitalphotos.net/StuartMiles

Mr. CBB
I’m from the UK and now a recent permanent resident in Canada. I bought my first house at the age of 21 after University then my second at the age of 24. I’ve always been fascinated with personal finance, savings, learning to make money and watch it grow while combating debts along the way. Canadian Budget Binder is a place where I get to share my experiences with personal finance and learn about yours along the way. I hope you stick around and check me out on Twitter, Facebook and Pinterest where I am active on all social media sites. Cheers, Mr.CBB
Mr. CBB
Mr. CBB

Comments

  1. We are both classified as non-smokers on our policies Mr CBB and it sure makes a world of difference! I say the not buying cigarettes pays for our travel, the insurance savings pays for the timeshare condo fees and taxes. Basically one decision improved the quality of our lives and hopefully the healthy duration by leaps and bounds! :-)

  2. Congratulations on being quit for over a year! I’m coming up on 3 years this May myself. I have life insurance through my employer, so I don’t have to pay anything at all for it, which is nice. We are trying to accumulate enough money before we leave this job, so we can self-insure for the rest of our lives. That eliminates the payment to the insurance company altogether!

    • I have some through my employer as well but it’s with the employer and I wanted one that was outside of employment as I may not be with them forever. Good for you both wanting to self insure. I think as long as there is a plan in place and we are being proactive it’s better than having nothing at all. Although some people simply don’t want life insurance and that’s a personal decision. We have a mate like that.

      • Our plan right now is HEFTY. Both of us have $400,000 policies. The way I see it is that (to self-insure) the amount we have saved/invested should cover all of our assets and the funeral if one of us were to die. By the time we leave our employer, that should hopefully be the case.

        • Well you sure know where you are headed good for you. I was just reading about our mate there at wise dollar how he lost his job this week. You know, nothing is ever written in stone and one of the main reasons we wanted to pay off our mortgage. Do you have a plan B? What would you do? Scary stuff really.

          • Our expenses are so low right now, so every extra dollar gets invested. If we were to lose our jobs, we’d be good for at least 3 years (including mortgage payments).

            On top of that, we have contract jobs which expire in 2016. So we have guaranteed work for 3 more years. If we keep up the saving trend that we’re on now, we’ll have enough saved for 15-20 years of expenses :)

            I’m calling that our plan B.

          • That’s awesome mate… maybe one day you can share your plan B with my fans!!

          • ;)

  3. That’s great Mr. CBB! It definitely does have a huge impact on life insurance premiums. I smoked the occasional cigar while in college, but nothing really beyond that. My Mom & stepdad smoked for years though and had to give it up cold turkey after my stepdad had bypass surgery and the money savings in just crazy.

    • Sometimes it takes a big scare with someone or a loved one that will jolt them into high gear with a desire to quit. We didn’t want it to get that far and I hope others will consider the same. Cheers

  4. Congratulations on quitting! Smoking does such horrible damage to the body that it’s no wonder rates are so much higher. My grandmother smoked like a chimney and died of lung cancer at 55.

  5. Good job on quitting smoking =)

  6. Good for you mate, I’ve never even tried a cigarette because I know I have an addictive personality so I didn’t even want to go there.

    • Well all my mates smoked back home but I was the only one in my family who smoked. They are very proud in fact I’m just proud of myself and the wife for suggesting we do it together. I never dreamed I would call myself a non-smoker. Can’t wait to go home!

  7. Christine Weadick says:

    Great article!!! It is interesting to see how much you can actually save by quitting!! I flipped this over my son’s way and I’ll see what he thinks of it and the links…..

  8. Obviously you could get hit by a bus tomorrow, but by quitting, you’ve likely added years to your life and raised your quality of life. My dad is a lifelong smoker. He just turned 65 and has already had a multitude of health problems related to smoking. His younger brother died almost 20 years ago from throat cancer, also directly related to smoking. Even if you don’t die or have a serious health problem, long term smokers stink, have leathery skin, and are hacking all the time. I know it must be one powerful habit. I’m so glad you and Mrs. CBB quit.

  9. That is an impressive way to save on life insurance. Congrats on quitting smoking. Quite the achievement.

  10. Congrats to both of you for kicking the habit and staying with it! Hubby, along with several others in our family, are former smokers, and it’s so wonderful to see them living healthier lives and saving money. SO happy for you!

  11. I’ve never been a smoker myself, but good for you to kick the habit – not an easy task!

  12. Hey CBB,

    I don’t know if you are aware… you can get insurance (special for smokers) where you get non-smoker rates for two years. If you become a non-smoker great! If not, you get “smoker rates” after the end of two years.

    Why wait?

    Cheers,

    Brian

    • Yes, thanks that is correct.

      • Hey CBB,

        You should consider going back to your advisor and consider converting some of your term into permanent coverage, assuming your cash flow is good.

        Why? I wrote a story about two years ago about annuities. At that time a 65 year old male could get 8% for life on his money the key is to of course have some permanent coverage in place. Taxes are about 20% less.

        The other reason is insurance companies make their money on the interest spread. Right now rates are low and will remain so for a long time. Hence rates are going up. Term on the other hand is great for the family if you die while the insurance is in place!! yet the odds of that before that is less than 1% before 65.

        People who are incorporated and understand taxes have the corporation buy the insurance since they want to pay less taxes and like the idea of the protection for the company as well as retire with more cash in their hands in retirement.

        Cheers,

        Brian

Trackbacks

  1. [...] Mr.CBB @ Canadian Budget Binder ~ How Smoking Affected The Cost Of Our Life Insurance Premium [...]

  2. [...] How Smoking Affected The Cost Of Our Insurance Premium- Check out how much money we saved with our insurance premiums just by quitting smoking!   [...]

  3. Friends of the Family: St. Patrick's Day Edition - The Family Finances says:

    [...] How Smoking Affected The Cost Of Our Life Insurance Premium at Canadian Budget Binder [...]

  4. Money Mail Carnival - March 17 2013 - Freeat33 says:

    [...] @ Canadian Budget Binder writes How Smoking Affected The Cost Of Our Life Insurance Premium – I can only hope that those that do smoke make the decision to quit for their own personal [...]

  5. [...] @ Canadian Budget Binder writes How Smoking Affected The Cost Of Our Life Insurance Premium – I can only hope that those that do smoke make the decision to quit for their own personal [...]

  6. Carnival of Money Pros | Nickel by Nickel says:

    [...] @ Canadian Budget Binder writes How Smoking Affected The Cost Of Our Life Insurance Premium – I can only hope that those that do smoke make the decision to quit for their own personal [...]

  7. [...] Life Insurance- After 1 year of being smoke-free we will see this decrease. Cost is for the both of [...]

  8. [...] mentioned a bit about our life insurance policies and how we applied for life insurance as non-smokers since we are now over 1 year smoke-free. We received our assessments back and we are now only paying [...]

  9. [...] great advantages for us health-wise and in the budget saving us money from not buying smokes and cheap life insurance. My point is if we have to make changes in our life for the good it can be done with [...]

  10. […] and costs associated with smoking are well understood and not disputed at all. Smoking makes a significant impact on the cost of life insurance. Why? Because smoking […]

  11. […] We were able to lower our life insurance policy in half after one year being […]

  12. […] At first when I read that I thought, oh no here we go again but I don’t think it’s a bad move on the governments part. Another good part aside from the Health benefits of quitting smoking you might also find that your life insurance premiums are lower. […]

Add Comment Register



Add Your Comment

*

CommentLuv badge