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 insurers 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.
"Smokers might pay over 60 to 70 percent more for life insurance premiums than their non-smoking counter parts. Certain insurers are more lenient towards smokers than others, and the company Foresters has a product that provides a non-smoker rate — if you intend on quitting in the next twelve months." - Gregory Rozdeba, CEO of Dundas Life and certified Life Insurance Advisor
Who do Life Insurance Companies Consider a Smoker?
When discussing life insurance for smokers, 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."
They will also consider anyone who has smoker in the last year to be a smoker, which may affect you if you have just recently quit. On the other hand, this means individuals who have been smoke-free for at least 12 months often qualify for non-smoker rates. Quitting not only improves overall health and reduces risks, but also leads to more favorable life insurance rates and expanded coverage opportunities.
Products that will classify you as a smoker include:
- Cigars and cigarillos
- Electronic cigarettes and vaping
- Chewing tobacco
- Nicotine patches and gums
Such categorization significantly impacts life insurance rates and coverage options. If you are labeled as a "smoker" due to tobacco or nicotine use, consider the potential benefits of quitting.
Vaping and E-Cigarettes
Vaping is becoming an increasingly popular alternative to smoking. Although some people consider it a "healthier" alternative, most insurance companies will still consider you a smoker if you vape or use e-cigarettes. Many of the health risks of vaping are still unknown, but life insurance companies would rather play it safe. They will still consider you higher risk if you use these products, and raise your premium costs accordingly.
Marijuana or Cannabis
There is no hard rule on how marijuana use will affect your life insurance rate. Life insurance providers have differing views on occasional marijuana use.
Before it was legalized in Canada in 2018, most insurance companies would have considered marijuana users as smokers. Today, some providers may still categorize such individuals as smokers.
However, other companies may others adopt a more lenient stance, especially if marijuana is not a daily habit.
How life insurers will see you depends on:
- How often you use marijuana: If it is an occasional habit, insurers may be lenient and still offer you preferrable non smoker rates.
- How you use marijuana: Insurers may be more lenient if you consume edibles than if you smoke regularly, due to the health risks associated with each.
- Why you use marijuana: The use of medical marijuana might be a red flag to insurance companies, as they will want to know if you have any pre-existing conditions or health risks.
If use marijuana occasionally, and are otherwise health, you are likely going to qualify for non smoker rates. However, if you combine it with tobacco, life insurers will consider you a smoker.
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.
As smokers often pay higher life insurance monthly 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 Smoking Affect 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 since they will have to pay the death benefit amount sooner, and collect fewer premiums. The way life insurance providers compensate for the additional risk of insuring smokers is simple: by slapping you with higher premiums.
Most insurers will brand you a smoker even if you have puffed just one cigarette in the last 12 months. They will also label you a smoker if you use tobacco in other forms, such as cigars, e-cigarettes, chewing tobacco, etc.
Life insurance for smokers costs, on average, anywhere between two or five times the 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 the example above, you can see that a 35 year old non smoker could pay as little as $29.70 per month for a 20 year plan with $250k in coverage. A smoker of the same age, however, could pay as much as $54.60 or almost double for the same coverage. Sample quotes are pulled from WinQuote.
In short, cigarette smoking is not good for your health nor your wallet.
Applying for Life Insurance Coverage as a Smoker
A “smoker” rating seriously raises your premium rate.
Given that, you may think of withholding the truth on your life insurance application, 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.
Tell 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.
This also applies if you vape. Urine and blood tests detect nicotine or cotinine in your system regardless of how you consume tobacco.
What happens if you lie?
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.
Even if you survive the term, lying on your application can have consequences later on.
- 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 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 life insurance 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.
Option 1: 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.
Option 2: Seek out life insurance policies that allow for future rate negotiation once you have maintained a smoke-free status
- 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.
All this said, quitting smoking is not as easy as it sounds. Remember, there are lots of resources available to help, and successfully quitting is not only great for your health, but it will also significantly lower your insurance rates.
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, it is always better to shop around. This is particularly true in the case of life insurance for smokers or those with health concerns.
All life insurers have their own underwriting. As a result, some providers might view a particular health condition as more problematic than others. This also means some carriers may offer more competitive rates to tobacco users than others.
How much life insurance do I need?
Before you get an online life insurance quote, figure out exactly how much coverage you require.
To do this, consider expenses such as:
- Any debts (such as home loan, car loan, credit card loan, etc.)
- 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!)
- 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.
Types of life insurance for smokers
Three main types of life insurance that smokers may want to consider are term, whole life, and guaranteed issue. The table below compares these options based on their coverage amount, premium cost, cash value, and whether they require you to undergo a medical exam.
1. 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 insurance 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 life insurance 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.
2. 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.
3. 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, you're probably wondering: which provider offers the most competitive rates for smokers in Canada?
Best for smokers: Industrial Alliance (iA)
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:
- This plan 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.
Best for those planning to quit: Foresters Financial
For individuals who are planning to quit smoking, Foresters offers a unique plan that offers non smoker rates.
According to their website, with the Quit Smoking Incentive Plan:
- "Smokers automatically receive lower rates for the first two years of their certificate. And if they quit within this time period, those lower premiums can continue. It’s a powerful incentive to stop smoking, giving someone the chance to live as healthier lifestyle as well as potentially save thousands of dollars."
This plan offers a financial incentive to help smokers quit the habit. If they are successful, they can continue to qualify for non smoker rates. Quitting is not only good for your health, but can save you a lot of money in the long run!
Frequently Asked Questions (FAQs)
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.
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.
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, which is intended to help them with financial needs such as funeral expenses, debt repayment, or ongoing living costs.
Steven has a deep background in life insurance. At Dundas Life, he's helped 1000s of clients find the right insurance coverage while also training dozens of insurance advisors during his career. Previously at Finaeo, Steven oversaw compliance and coaching for over 350 independent insurance brokers. Steven is also rated the #1 Insurance Agent in Toronto on Rate-My-Agent.