Smoking is the leading preventable cause of death across the world. Picture: 123RF/KENISHIROTIE
Smoking is the leading preventable cause of death across the world. Picture: 123RF/KENISHIROTIE

If you gave up smoking when lockdown started and can maintain that until the end of September and beyond, you could save significantly on your life insurance premiums.

An online survey by the Research Unit on the Economics of Excisable products at the University of Cape Town (UCT) found that an estimated 800,000 to one-million smokers had chosen to end the habit after the ban on the sale of cigarettes during lockdown.

To be considered a nonsmoker, you have to have given up smoking for at least six months and you would have to pass a cotinine test, Lisa Gibbon, divisional executive of onboarding at Liberty, says.

Cotinine, nicotine's main breakdown product, can usually be detected in your body for up to three months after ingestion. Most insurers require that you have not smoked for 12 months before you are considered a non-smoker.

Dr Friedel Kerchhoff, the chief medical adviser at Sanlam, says the premiums smokers pay could be up to four times higher than those offered to non-smokers.

If you fail to disclose that you are a smoker when you take out a life insurance policy, this can result in your policy being voided — no payout when you die — or a reduction in the payout when a smoker surcharge is applied retrospectively.

How much more do you pay for life insurance as a smoker?

Money asked life insurers what the insurance premium would be on a R2m life policy for a 33-year-old man, working in admin, and how it would differ if he was a smoker.

  • Liberty said the nonsmoker would pay R328 a month, while the smoker would pay R478 a month.
  • Momentum Myriad said the smoker would pay about 80% more than the nonsmoker.
  • Old Mutual said if the smoker earned R25,000 a month, had no other net assets, and wanted a level cover of R2m with a level premium, the premium would be R739 vs R442 a month for the nonsmoker.

Why are smokers a higher risk for insurers?

Kerchhoff says smoking is the leading preventable cause of death across the world. “Tobacco-related deaths annually number up to six-million (one in 10 deaths — more than the combined death total for HIV/Aids, malaria and TB). Most deaths are related to the direct use of tobacco and a smaller number due to second-hand smoke exposure in nonsmokers,” he says.

Smoking also affects the rate of disease, and is the second-highest risk factor for the burden of disease worldwide.

“This morbidity burden alone has profoundly serious economic consequences in terms of lost income, and health-care costs,” he says, and affects insurers, which is why smokers pay more for cover.

What qualifies as smoking?

Any ingestion or inhalation of chemical substances is considered damaging to your health, so the occasional use of hubbly bubblies or hookah pipes, social smoking in any form no matter how seldom, vaping and even nicotine patches, will all result in you being classified as a smoker for life insurance purposes.

Kerchhoff quotes research showing that using a hookah for an hour can equal smoking 100 cigarettes and there is increased risk of infection from use in a group.

Insurers are, however, seeing an overall increase in people kicking the habit.

John Kotze, Old Mutual’s head of retail protection Solutions, says Old Mutual has seen a consistent shift from smokers to non-smokers.

Only 9.3% of Old Mutual’s underwritten lives for the first half of this year were smokers. Over the past three years, there has been a reduction of 0.4% in the number of smokers on average per year, he says.

Laurence Hillman, CEO of 1Life, says their book shows fewer people are smoking in 2020 compared to the same time in 2019, which could potentially indicate that more people are opting not to smoke.

About 17% of Momentum Myriad’s life insured book consists of smokers, says Jenny Ingram, head of product development.

Over the past 10 years, the proportion of smokers has reduced somewhat and in the past few months the company saw an increase in alterations where policyholders changed from smokers to non-smokers, she says.

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