Life insurance underwriting exceptions for tobacco users are now available for daily cigar smokers, tobacco chewers, dippers, some vapers, even for applicants with a positive labs. Identifying a non-tobacco pricing solution for a tobacco user cuts their annual premium in about half. Exceptions are highly fluid and vary from one insurer to another. Right now, one highly rated brand name insurer even offers super-preferred non-tobacco rates to occasional cigarette smokers!
Insurer Selection is Key
In an effort to keep morbidity and mortality charges as low as possible, many conservative life insurers charge most tobacco users smoker rates, effectively doubling premiums. Even one cigarette, smoked 2 years ago, will require tobacco pricing at some carriers. Other highly-rated insurers offer non-tobacco pricing to former smokers after just one year. Several insurers offer non-tobacco rates to daily tobacco users other than cigarettes, even with positive labs. If you have a prospect or client who uses tobacco – other than daily cigarette smokers – let us try to qualify them for one of the underwriting exceptions. They’ll appreciate you guiding them toward a solution that’s right, just for them – the pricing difference is highly significant. Let’s look at some recent cases:
Kayla, F, 26, attorney, vapes daily, $3M 20-year level term for income replacement purposes:
- Tobacco premiums = $3,024.70
- Non-tobacco premiums = $1,535.01
- Annual savings for non-tobacco premium: $1,489.69 = 49% Discount
- Total Savings over 20 years: $29,798.80
Hunter, M, 37, baseball player, likes to chew tobacco daily, needs $5M 30-year level term to cover a new mortgage:
- Tobacco premiums = $18,682
- Non-tobacco premiums = $8,169.70
- Annual savings for non-tobacco premium: $10,512.30 = 56% Discount
- Total Savings over 30 years: $315,369
Kaitlyn, F, 56, actress, occasionally smokes cigarettes while attending social events, needs $2M of guaranteed level premium permanent insurance to leave a $1M legacy for each of her two adult children:
- Tobacco premiums = $46,910
- Non-tobacco premiums = $24,263
- Annual savings for non-tobacco premium: $22,647 = 48% Discount
- Total Savings to approximate life expectancy (30 years): $679,410
Robert, M, 61, business owner, enjoys cigars on the golf course several times per week; Jackie, F, 55, homemaker, does not use any form of tobacco, super healthy. They need to add $10M survivorship life coverage to their ILIT to cover anticipated death taxes upon the second death:
- Premiums with Robert qualifying for tobacco rates = $160,236
- Premiums with Robert qualifying for non-tobacco rates = $102,822
- Annual savings based on non-tobacco premiums for Robert: $57,414 = 36% Discount
- Total savings to approximate life expectancy (35 years): $2,009,490
These examples demonstrate how important it is to select the right carrier for tobacco users. Premium savings over the years are huge! The variables listed below will help us identify our industry’s top solution(s) for tobacco using applicants.
Tobacco Use Pre-Underwriting Questions
To identify our industry’s top solutions for tobacco users, please provide answers to the following questions:
- What is your name:
- What is your date of birth:
- What is your gender?
- What death benefit(s) should be quoted?
- How long is the coverage needed (# of years, or permanent):
- List all tobacco product(s) used during the past 12 months:
- Describe the frequency of use for each product:
- Have you tested positive for nicotine on recent insurance labs? If yes, date of labs:
- If tobacco use has changed during the past 3 years, describe how it has changed:
- Describe current or past use of tobacco cessation products (e.g. Chantix or Zyban):
- Do you use any other combustible products (e.g. marijuana)? If so, describe use pattern & frequency:
- Do you take any prescription medications for any reason? If so, please list all and what condition(s) they are prescribed for:
- Are you aware of any other medical condition, moving violations, hazardous activities, sports or private aviation that might impact underwriting?
- Can you think of any other information that might impact life insurance underwriting?
Please send answers to the above questions to your CPS Advantage representative or send an email to firstname.lastname@example.org. We’ll get back to you quickly with our industry’s best solution(s).