Insurance costs rise for smokers

Warning: Smoking Could Double Your Life Assurance Premiums is not a message you would ever see stamped across a cigarette packet, but there is a financial cost to smoking greater than the €5.21 you need to hand over every time the craving for a packet of 20 Marlboro Lights is too strong to ignore.

A study by life assurance company Canada Life has found that the gap between the amount smokers and non-smokers pay for life cover has widened over the last 10 years. Smokers used to pay an average of 50 per cent more each month, but now they typically pay almost twice as much as the nicotine-free."Non-smokers have benefited from rate reductions across the board as life expectancy has increased, but smokers have fallen behind," says Mr Peter Mitchell, marketing manager for Canada Life.

The reason is straightforward: smoking reduces a person's life expectancy by seven years, according to a study by the Society of Actuaries in Ireland. Smokers are more at risk of dying early, have a higher rate of claims and therefore higher premiums.

"The continuous mortality investigations life assurance companies and actuarial firms carry out all point in the one direction," says Mr Tony Battigan, chief underwriter at Canada Life.

"Smoking is a major contributory factor to lung cancers and cancers of the stomach and the oesophagus, as well as being linked to coronary disease."

Although people have been aware of the health risks posed by smoking for longer, the gap between the amount smokers and non-smokers pay has only widened in the last 10 years because newer studies have used a wider population and age range, according to Mr Battigan.

For a male smoker aged 39 on his next birthday, the cheapest level term assurance available is €61.82 a month at Eagle Star for a policy of €200,000 over 25 years. A male non-smoker pays €33.59 for the same cover.

Female rates in both categories are lower because women have a higher life expectancy than men. Premiums for female smokers range from €44.86 at Eagle Star to €73.63 at Quinn Life compared to €23.64 and €41.69 for non-smokers at the same companies.

But throwing away your lighter and raiding the chemist for some nicotine patches won't impress anyone. "Some people will take out policies at smokers' rates, then in the New Year, they decide to give up," explains Mr JohnGeraghty, of LABrokers.ie. "But the company won't allow them to just switch rates."

Although some life assurance companies - for example Royal Liver, Ark Life and Eagle Star - class cigar smokers as non-smokers, most will usually define a non-smoker as a person who has not smoked any tobacco in the previous 12 months and does not intend smoking in the future. With some companies, the smoke-free period is 24 months.