The cheapest and most affordable insurance for smokers are those that do not load the smokers, i.e. both smokers and non-smokers are paying the same premium amount. Yup, you heard me right – the same premium! Such a plan does exist!
The effect of smoking surcharges is especially pronounced in whole life and critical illness insurance and I will share more in this article.
What is considered a smoker?
I had some clients asked me, “If I am a social smoker, am I considered a smoker?”. Or, “I only smoke twice a year, can I declare myself as a non-smoker?”. Unfortunately, so long as you have smoked one cigarette in the past twelve months, you are considered a smoker in the eyes of the insurer. Conversely, if you have not smoked in the past twelve months, congratulations, non-smoker! Everyone already knows the benefits of not smoking, so I will not be preachy here 🙂
So, I should not hide my smoking status?
You shouldn’t. The insurance contract between the insurer and the proposer or applicant is made on the principle of utmost good faith. This means the insurer expects you to be honest and truthful with the information you provide in the proposal form. Then, they decide if they should accept you on standard terms, load your premium, exclude certain coverage, or decline you altogether.
In the case of smoking status, most insurers automatically generate a higher premium for smokers in the quotation system. If you lie about your smoking status to gain a preferential rate and the insurers find out, they have a right to (and most likely they will) decline paying the claim and refund all the premiums you have paid so far. This is a terrible scenario to be in, because not only will you not get your pay-out (when you need it the most), you now have an issue getting coverage next time with your new (deteriorated) health condition.
But how will the insurers know that I smoked?
Nicotine in the bloodstream can be detected by a blood test, which the insurer may request for. Or perhaps when you saw a doctor some time ago, you mentioned that you smoked and it’s written in the medical reports. The insurer may request for the report when you file a claim.
But you are right, sometimes they wouldn’t know. My question then will be, why would you want to run the risk when you can be honest? We all love being honest. Here, we get you the most affordable health insurance for being an honest smoker.
Okay lah, tell me now what are the insurance for smokers
Whole life insurance
I will compare the premium rates of whole life plans with critical illness of a few different insurance companies. They are based on the profile of a 30 year-old male getting an approximate $200,000 sum assured coverage with a 15-year premium payment term.
Shockingly, the premium loading for smokers can go up to almost 50%. I hope smokers who buy insurance from only one company are aware that there are options out there that do not penalize you, or maybe not as much.
Insurance company AB does not charge smokers a higher premium.
Insurer CD loads smokers, like most insurers do.
The highest loading from Insurer EF.
It would be interesting to note too, Insurer AB has the cheapest critical illness whole-life premium even at non-smoker rate.
If you are wondering about term insurance for smokers, I have written a supplement to this article over here.
Disability income insurance
There are only three companies offering disability income insurance in the market. The most affordable of the three does not differentiate between smokers and non-smokers as well. The best part is, the insurer is currently running a promotion for this plan – 35% perpetual discount on the premium (we are not sure when this promotion will end).
The annual premium for a $5,000 monthly benefit, based on a 30 year-old male working in a Class 1 occupation, is only $626 (0.65 x $964)!
The best deal.
Long-term care insurance
The recently introduced TM Protect 1 (best for people who do not qualify for the Eldershield programme because they are not yet 40 years-young) is the only non-government initiated long-term care insurance in the market. Similar to Eldershield insurance, it does not treat smokers and non-smokers differently.
If you are eligible for Eldershield, you should enhance your Eldershield coverage, and this can be paid for with your Medisave monies. Almost “free” lah.
All hospitalization and surgery expenses insurances (known as Medishield in our sunny Singapore) do not differentiate between smokers and non-smokers. It is the most important insurance to get, and if you haven’t already upgraded yours, please do me a favour and get it pronto!
Being honest pays
I will not be disclosing here what are the names of the plans, in case the insurers decide to remove these special concessions (and they can do so anytime).
If you have bought an insurance at smoking rates but have quit smoking more than a year ago, you can appeal to have your premiums adjusted. If not, I will be happy to share with you personally about the cheapest insurance for smokers – just drop me a mail at the contact form right at the bottom of the page 🙂
Note: Author is a Certified Financial Planner® with one of the largest financial advisory firm that partners with most of the insurers in Singapore.