Let's set things straight. Over 10% of Canadians are smokers.
Given the increased health risks, it is no surprise that life insurance companies charge higher rates for smokers.
However, this doesn't mean you can't get affordable life insurance. Some life insurance companies are more lenient toward smokers than others.
So, who offers the best universal life insurance for smokers in Canada?
Continue reading to find out about the best life insurance policy for smokers, and our top recommendation for life insurance companies.
Who do Life Insurance Companies Consider a Smoker?
When discussing "smokers" and life insurance, the common perception is often limited to individuals actively puffing cigarettes.
However, insurance companies may have a broader definition, classifying anyone using tobacco or nicotine products as a "smoker." This includes smokeless tobacco, nicotine patches, or vaping.
Such categorization significantly impacts life insurance rates and coverage options. If labeled as a "smoker" due to tobacco or nicotine use, consider the potential benefits of quitting.
Many insurers offer better rates to individuals who have been smoke-free for at least 12 months. Quitting not only improves overall health and reduces risks, but also leads to more favorable premiums and expanded coverage opportunities.
Seeking guidance from insurance experts or discussing options with providers can help you understand the impact of your smoking status and find suitable coverage to protect your financial future and loved ones.
Apart from cigarettes, other products that will classify you as a smoker include:
- Cigars and cigarillos
- Electronic cigarettes and vaping
- Chewing tobacco
- Nicotine patches and gums
Life insurance providers have differing views on occasional marijuana use. Some may categorize such individuals as smokers, while others adopt a more lenient stance, especially if marijuana is not a daily habit.
As smokers often pay higher life insurance premiums, it is wise to consult with an insurance advisor who can assist in finding the best possible deal. An advisor can navigate various policies and insurers, considering the frequency of marijuana use, to identify the most favorable coverage options for you.
Being open about your habits and seeking professional guidance will ensure you secure suitable life insurance to protect yourself and your loved ones at the most competitive rates.
How Does Cigarette Smoking Affect My Life Insurance Rates?
Smokers have a greater risk of developing serious health conditions like diabetes, heart disease, and certain cancers. On average, smokers also die 10 years sooner than non-smokers.
The earlier you are likely to die, the worse it is for your insurer. This is because they will have to pay the death benefit amount before they could collect many premiums. And that — as you may guess — does not work in their favor.
So how do life insurance providers compensate for the additional risk you present to them as a smoker?
The answer is simple: By slapping you with life insurance premiums considerably higher than the standard.
A smoker, on average, pays anywhere between two or five times the life insurance rates paid by a non-smoker of the same age, gender, and health status. This gap is usually less the younger you are, but widens as you age.
In short, cigarette smoking is not good for your health nor your wallet.
Unfortunately, how we classify someone as a smoker is not how life insurance companies do it. Most will consider you a smoker even if you have puffed just one cigarette in the last 12 months.
And as we touched on earlier, it is not just cigarette use that will earn you the “smoker” rating. A life insurance company will brand you a smoker if you use tobacco in other forms, such as cigars, e-cigarettes, chewing tobacco, etc.
What to do When Applying for Coverage as a Smoker?
A “smoker” rating seriously raises your premium rate.
Given that, you may think of withholding the truth, especially if you are an occasional smoker — but that is a slippery slope you would do well to avoid. There is a good chance you may get caught and end up in a worse position than if you had told the truth.
The majority of life insurance policies require taking a life insurance medical exam, which includes urine and blood tests. These tests can detect nicotine and cotinine if present in your system. Since the traces of these two substances can stay inside you for weeks, the life insurance company is likely to find out about your tobacco use even if you only smoke occasionally.
And if you are wondering if vaping could get you listed as a smoker, the answer is “yes”. Urine and blood tests detect nicotine or cotinine in your system regardless of how you consume tobacco.
However, for the sake of argument, let’s say the insurance company does not discover the truth during the underwriting process. Are you in the clear now?
No, not really.
Life insurance policies include a contestability period — usually two years from the date on which the traditional life insurance policy first comes into effect. If you die during this time, the life insurance company can investigate the claim and deny it if you lied on your life insurance application.
But what if you survive the contestability period? Are you safe then?
If the life insurance company discovers the truth after two years, they can still adjust the terms of your policy based on what they would have offered you initially had you been upfront about your smoking status. This might lead to a higher premium rate or decreased death benefit.
To sum up, honesty is the best policy on your life insurance application. Though you are likely to pay higher life insurance rates, you will have peace of mind that comes from knowing that your family’s future is secure.
What if You Quit Smoking?
After making the decision to quit smoking, you may be eager to secure better life insurance rates.
However, most life insurers typically require individuals to be quit smoking and be smoke-free for a minimum of 12 months before offering improved rates for non-smokers. If you are young and healthy, it might be worth considering waiting until you meet this smoke-free requirement before applying for a policy.
Patience can be rewarding, as demonstrating your commitment to quitting smoking and living a smoke-free lifestyle can lead to more favorable premiums and broader coverage options. For those who have recently quit smoking and need immediate life insurance coverage, there are viable alternatives to consider.
One option is to explore short-term life insurance policies.
These policies provide temporary coverage for a specific period, offering protection during the transitional phase while you work toward becoming eligible for better rates as a non-smoker.
This can be particularly useful if you require immediate coverage for a short period while your eligibility for non-smoker rates approaches.
Another approach is to seek out life insurance policies that allow for future rate negotiation once you have maintained a smoke-free status for the required duration.
Such policies enable you to secure coverage promptly, with the potential to renegotiate the premium rate in the future based on your non-smoking status.
This way, you can benefit from immediate coverage while keeping an eye on the possibility of obtaining better rates as a non-smoker down the line.
Finding the Best Life Insurance for Smokers
Smokers pay two to five times higher premiums than non-smokers for life insurance.
However, you can cut down on the life insurance cost by picking a provider that offers competitive rates to smokers.
In short, shop around before you sign up. Whether it is life, home, or auto insurance, it is always better to shop around. This is particularly true in the case of life insurance for smokers or those with health concerns.
Here is the thing. Life insurers have their own underwriting. As a result, some providers might view a particular health condition as more problematic than others. It also means some carriers may offer more competitive rates to tobacco users than others.
However, before you get an online life insurance quote, figure out exactly how much coverage you require. To do this add all your debts (such as home loan, car loan, credit card loan, etc.) and if you have a child, consider the cost of putting them through college. Calculate how much your family might need for end-of-life expenses. In Canada, a funeral can easily cost as much as $10,000.
Then, determine how much your loved ones will lose if you pass away unexpectedly. Without the paycheck you bring home, how will they survive?
When you buy life insurance, add up these costs to determine the amount of coverage you want. Once you have a figure in mind, grab a life insurance quote from multiple providers and compare them.
Smokers looking to buy life insurance can choose from several policy types, including:
Term Life Insurance
Term life is the more simple and affordable life insurance option.
It has only one purpose — to pay the death benefit to your family if you die within the policy term. Unlike a whole life insurance policy, it does not come with added extras such as cash value, which tend to increase your premiums.
A term life policy lasts for a specific period, such as 10, 20, or 30 years or until you are of a certain age. Your family gets the payout if you die within the term. If you survive it, you get nothing.
Many people use term life as a replacement tool. They are looking for a policy that will provide funds for their family to cover expenses for a certain period if they were to pass away unexpectedly.
Term life is also a good option for covering debts. For instance, if you have a home and car loan, you can take a term policy that lasts as long as your longest debt and has a payout that can cover both the loans. This will ensure your debts will not fall on the shoulders of your loved ones if you die suddenly.
Whole Life Insurance
A whole life policy lasts your entire lifetime.
That means your beneficiary will receive the death benefit after your death, whenever it is. For this reason, whole life is the closest thing to fill-it-shut-it life insurance.
Whole life policies also include a cash value account, which grows over time. The policy’s cash value is for you to use while you are still alive. You can withdraw from or borrow against the value at any time and use the money however you like. Whatever value there is left unused at the time of your death will be absorbed by the insurance company, and your family will only receive the death benefit.
Guaranteed Issue Life Insurance
This type of life insurance policy requires neither a life insurance medical exam nor health screening.
If you are a smoker with a serious health condition, this option may appeal to you since the coverage is almost guaranteed . But remember, the coverage is limited — usually capped at $25,000. That said, some life insurance is better than none.
With guaranteed life, your premiums are based on of your age, gender, and coverage amount. Your health and smoking status are not considered because there is no medical exam.
The caveat, however, is that such a policy costs considerably higher premiums than a fully underwritten one.
Recommended Top Companies for Smokers
So, which provider offers the most competitive rates for smokers in Canada?
According to our research, Industrial Alliance offers the most competitive rates for smokers in Canada across all age groups.
Their rates are among the lowest in the market for smokers, making them an attractive option for individuals seeking affordable life insurance coverage despite their smoking status.
One standout feature of Industrial Alliance's offerings is their Pick-A-Term life insurance policy, which allows smokers to select any term between 10 to 40 years. This flexibility empowers smokers to tailor the coverage duration to their specific needs and preferences, ensuring they find a policy that aligns perfectly with their financial goals and lifestyle.
If you are a smoker in Canada looking for life insurance, considering Industrial Alliance as a potential provider could be a smart choice to secure a policy that offers competitive rates and the flexibility you need.
How can smokers get lower life insurance premiums?
Smokers can take specific actions to potentially lower their life insurance rates.
The most effective method is quitting smoking altogether.
Insurance companies often offer significantly lower rates to individuals who have been smoke-free for a certain period, usually around 12 months. By quitting smoking, policyholders can expect to see substantial reductions in their life insurance premiums, sometimes up to 50%, while also promoting better health.
Another option for managing life insurance cost as a smoker is to consider switching to a policy with a higher death benefit.
While this may come with increased premiums, it can be a strategic choice for those seeking to maximize their coverage while balancing costs. Additionally, when you are buying life insurance, you should compare rates from different life insurance companies, as rates can differ significantly between companies.
Are there any life insurance companies that do not consider smokers to be high-risk?
Yes, some life insurance companies do not categorize smokers as high-risk individuals.
Various insurance providers use different criteria to assess risk, and some may not even consider smoking as a determining factor. In fact, there are specialized life insurance companies that focus on offering coverage to smokers, and they may have a different perspective on the risk associated with smoking. These companies recognize that smokers can be eligible for coverage and may not necessarily view them as high-risk individuals. As a result, smokers have options to explore and find suitable life insurance policies that meet their needs and financial objectives.
How does the death benefit work with smokers life insurance?
When buying a life insurance policy, it's common for applicants to undergo a medical exam to assess their eligibility for coverage. Smokers are typically charged higher premiums because they are considered to be at a higher risk compared to non-smokers. This higher risk is due to the health complications associated with smoking, which can impact life expectancy and increase the likelihood of filing a claim.
However, it's essential to understand that if you pass away while your life insurance policy is active, your beneficiaries will receive the death benefit regardless of the cause of death.
This means that even if the cause of death is related to smoking, the insurance company will still pay out the death benefit to your beneficiaries. The purpose of life insurance is to provide financial security to your loved ones after your passing, and the death benefit is intended to help them with financial needs such as funeral expenses, debt repayment, or ongoing living costs.