What does life insurance cost for a smoker?

Sub Editor · 7 January 2021
Did you know that smoking cigarettes can spike your life insurance premiums by over 80%? With more than half of Australian smokers who want to quit keen to cut costs, Canstar crunches the numbers on how much more expensive life insurance and income protection premiums are on average for smokers, with breakdowns based on the policyholder’s age, sex and occupation.

Cost is a factor for many Australians who smoke, and it’s a big reason why some are eager to quit. For example, pack-a-day smokers who spend $21 on cigarettes daily are out of pocket upwards of $600 a month, and over $75,000 over ten years, according to icanquit.com.au. But smoking can mean incurring other increased costs, including when it comes to life insurance premiums. In this article, we cover:

If you are considering life insurance that covers smoking, you may want to review some of the products rated by Canstar.

Life insurance costs: smokers v non-smokers

If you have a dangerous job or a risky hobby, it’s likely you’ll set off red flags with insurers. But, what about your lifestyle habits, such as whether or not you smoke occasionally, or all the time? 

Canstar has analysed how much more males and females who smoke pay in direct life insurance and direct income protection premiums based on policies on our database, as well as how career choice and age can influence your ongoing costs. On average smokers can expect to pay 81% more than an equivalent non-smoker for direct life insurance, and 26% more than an equivalent non-smoker for direct income protection insurance.

Smoking insurance infographic

Do male or female smokers pay more for life insurance?

Based on Canstar research, Australian male smokers, particularly older Australian men, pay much more than Aussie female smokers in direct life insurance premiums each month. For example, a female smoker in her twenties pays on average $52.57 in monthly premiums, while male smokers in the same age bracket pay $77.62 per month, on average.

Does age impact direct life insurance costs for smokers?

The impact of smoking on direct life insurance premiums  becomes more pronounced the older the policyholder becomes, contributing to the potentially high cost of smoking as a lifestyle habit over time. According to Canstar’s data, a male smoker in his twenties pays an extra $29.25, on average, each month compared to a non-smoking male of similar age. By his forties, a male smoker on average pays $85.07 extra in premiums each month, and by his late fifties, the difference is $280.80 monthly. 

Average monthly direct life insurance premiums

$500,000 sum insured
Age Female Male
Non smoker Smoker Non smoker Smoker
Twenties $32.70 $52.57 $48.37 $77.62
Thirties $35.39 $59.23 $45.99 $84.38
Forties $63.57 $117.92 $79.36 $164.43
Early fifties $122.59 $224.96 $163.89 $332.42
Late fifties $203.85 $356.18 $301.61 $582.41

Source: www.canstar.com.au. Prepared on 14/12/2020. Based on quotes obtained for Canstar’s 2020 Direct Life Insurance Star Ratings (June 2020).

Research suggests if you quit by age 30, you avoid almost all excess risk with smoking. But, if you quit at age 50, you only halve your risk of smoking-related death, a factor which may be considered by insurers in reviewing your premium if you smoke with age.

Does occupation impact income protection costs for smokers?

When it comes to careers, what you do for a living – and how much risk is involved – will impact your life insurance premium, according to Canstar research. This is the case for both smokers and non-smokers. 

Using the example of policyholders in their 30s, the table below shows that, on average, direct income protection premiums are highest for truck drivers and lowest for people  who work in accountancy, across both sexes and regardless of smoking status. On average, women pay more than men for direct income protection across  occupations analysed by Canstar. In fact, a female in her thirties who does not smoke pays more in monthly premiums than a man in his thirties in the same line of work who does smoke, across all of the professions analysed.

Average monthly direct income protection premiums

Person in their thirties*, monthly benefit of $3,125
Occupation Female Male
Non-smoker Smoker Non-smoker Smoker
Accountant $60.40 $76.00 $45.81 $57.58
Car mechanic $112.83 $142.58 $82.66 $104.34
Checkout operator $97.49 $122.12 $73.83 $92.43
Chef $102.13 $128.74 $73.98 $93.10
Clerk $64.61 $81.31 $48.47 $60.94
Commercial cleaner $107.87 $135.14 $81.34 $101.88
Electrician $112.83 $142.58 $82.66 $104.34
Receptionist $64.61 $81.31 $48.47 $60.94
Registered nurse $94.83 $120.09 $67.83 $85.80
Retail manager $65.82 $82.83 $49.32 $62.00
Sales assistant $70.27 $88.40 $52.60 $66.10
Sales representative $66.83 $84.10 $50.28 $63.19
Secondary school teacher $77.01 $97.25 $54.24 $68.36
Store person $82.26 $103.38 $62.98 $79.08
Truck driver $124.76 $156.38 $94.26 $118.11
Waiter $102.19 $128.00 $77.69 $97.26

Source: www.canstar.com.au. Prepared on 14/12/2020. Based on quotes obtained for Canstar’s 2020 Direct Income Protection Insurance Star Ratings (March 2020). *Premiums based on quotes for a sample of ages within the thirties age group: 32 and 37.

Will life insurance pay if I smoke?

Life insurance may still pay if you smoke cigarettes. According to life insurer TAL, “generally, the same cover is available for smokers and non-smokers”. However, if you are classified as a smoker, your insurer will likely charge an extra amount, known as a loading, that makes your regular premium more expensive.

If you are one of many Australians with life insurance through super, you may receive group insurance and blanket cover by default, regardless of whether you smoke or not. Term life cover (also known as death cover), income protection cover, trauma cover and total and permanent disability cover (TPD) are offered by providers. You may be asked to disclose if you smoke on your application for a specific life insurance policy, or if you update it, by increasing your level of cover, for example.

Why do smokers pay more for life insurance?

Insurers assess the risk you represent when you apply for any insurance policy, considering factors such as smoking status, the type of policy you have, how much cover you take out, your age, your sex and your medical condition in setting your premium. If you smoke, you’ll have a different risk profile, and this will be factored into your premiums. Insurer Suncorp, for example, says smokers are “at a higher risk of dying prematurely and/or suffering a smoking related illness than a non-smoker”.

Can I save money on my life insurance if I quit smoking?

With Canstar’s research showing smokers pay 81% more on average for direct life insurance, and 26% more on average for direct income protection insurance than equivalent non-smokers, the data suggests you may be able to save in insurance premiums by kicking the habit. If you haven’t smoked in over a year, it may be worth contacting your insurer to let them know your circumstances have changed and ask whether they will consider reviewing your premiums. You may also be interested in comparing life insurance with Canstar to see if a better deal is available.

Smokers v non smokers: what’s the difference for life insurance?

Many insurers choose to group policyholders simply as smokers or non-smokers, but how much you smoke – plus how you consume tobacco – may also be considered in assessing your overall risk and premiums.

Smoking classifications can be as general as if you’ve smoked ‘any form of tobacco, or any other substance’. CommInsure, for example, asks in its non-smoker’s declaration if you have smoked cigarettes, cigars or pipes, used e-cigarettes for inhaling or vaping, had nicotine replacement therapy (NRT) or taken any other inhaled substance. If you answer ‘yes’ to any of these questions, CommInsure says you will not be eligible for its non-smoker rates.

Are e-cigarettes or vaping the same as smoking for life insurance?

Many insurers consider vaping e-cigarettes as comparable to being a smoker. It’s worth noting that it’s illegal to buy or sell nicotine for use in e-cigarettes in Australia, and from 1 October 2021, Australians will need a doctor’s prescription to import liquid nicotine.

How does ‘casual’ smoking impact life insurance?

If you are a light or occasional smoker, you may still be classified in the same was as more frequent smokers by your life insurance provider. You may like to review your life insurance policy if you are uncertain of terms and conditions that apply in the product disclosure statement (PDS). You can also speak to your insurer directly if you have any questions.

How does nicotine replacement therapy impact life insurance?

Even if you are trying to quit, you may still be considered as a smoker by your insurer while you use nicotine gum, patches, sprays, lozenges and inhalers as part of nicotine replacement therapy (NRT). Many insurers do not differentiate between smoking and other types of nicotine use for life insurance or even health insurance.

Do I need to tell my insurer I smoke?

A duty of disclosure applies when you sign up for any type of insurance, including life insurance. Legally (under the Insurance Contracts Act 1984, to be specific), you need to disclose anything that’s relevant to help an insurer decide if they want to accept the risk of insuring you, and their terms for doing so. Up to 20% of tobacco users fail to declare their smoking status correctly, while some industry experts claim this could be as high as 50%, according to a global report on smoking and insurance. If you are not truthful to your insurer, there is a risk you’ll have your claim denied, and lying or omitting information can be considered insurance fraud, according to Suncorp. 

If you make a claim, an insurer can take steps to verify the details you gave when applying for or renewing your policy, such as by reviewing your Medicare records, accessing your Pharmaceutical Benefits Scheme (PBS) data, contacting your doctor to check your medical history. An underwriter may also require you to have a medical exam or tests to assess if you have any signs of respiratory or circulatory disease. A cotinine test may also be requested to measure nicotine in your blood, urine, saliva or even hair, giving an insurer insights about your tobacco use.

What if my insurer incorrectly classifies me as a smoker?

In 2020, the Australian Securities and Investments Commission (ASIC) found seven super funds had overcharged more than about 150,000 Australians who were incorrectly categorised as smokers by default when they joined the fund, leading to higher premiums. Some of the funds agreed to compensate certain members who were affected. 

Checking your life insurance through your super or direct life insurance provider may be worthwhile to ensure you haven’t mistakenly been classified as a smoker. ASIC says you can approach your fund initially if an error has been made, and contact the Australian Financial Complaints Authority if the issue isn’t resolved by your insurer.

Support to quit smoking

The Australian Government Department of Health offers advice on quitting methods such as going cold turkey, gradually cutting down, nicotine replacement therapy (NRT) and prescription medications. The My QuitBuddy app is available to encourage Australians to quit smoking and the Quitline hotline can be contacted on 13 QUIT (13 7848), to talk to a counsellor or request a callback.

Quit smoking programs are also often offered as part of health insurance extras cover. Australian Unity offers cover for eligible members who participate in approved Quit Smoking programs, for example, while Bupa offers a NRT benefit for eligible members as part of its health management extras service. 

Cover image source: Pcess609 (Shutterstock).

This article has been reviewed by our Deputy Editor Sean Callery before it was published as part of our fact-checking process.

Jacqueline BeleskyJacqueline Belesky is a Sub Editor at Canstar. She brings over 15 years of experience in corporate communications, media and publishing and holds a Bachelor of Journalism (Distinction) from Queensland University of Technology and postgraduate qualifications in Writing, Editing and Publishing from the University of Queensland. Jacqui was previously a Global Content and Media Manager for ABB in the UK and in Oslo, Norway, and has worked in Australia as a journalist for News Corp and editor for the Queensland Government, John Wiley & Sons and the University of Queensland. Jacqui’s articles have been published in The Courier-Mail, The Gold Coast Bulletin and on www.news.com.au. She also brings experience managing the editorial production of annual reports, financial statements, research papers and supplements on topics such as business sustainability and the global financial crisis. 

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