Life Insurance Q&A – Cash Value Life Insurance and Smokers

Question:  I have a cash value life insurance policy that I purchased about 3 years ago.  I have been paying premiums every month.  When I bought the policy I was a smoker and my rates were pretty high.  Since I bought the policy I quit smoking.  Can I change to non-smoker now or do I have to buy a new cash value life insurance policy?  Thanks – Erin

Answer:  Congratulations are in order since you’ve quit smoking!  Not only will you save on cigarettes, but you may be able to save a substantial amount on your insurance premiums as well.  However, I have to caution you that there may be other factors in changing from a smoker to a non-smoker with your cash value life insurance policy.  The process is relatively simple, but sometimes underwriters can be strict on their underwriting guidelines in a case such as yours.  To change, you will need to answer a set of medical related questions and possibly have new blood and urine samples taken.  Your insurance company will schedule and pay for these tests. Theoretically, since you’ve quit smoking for greater than 1-2 years, you should be able to get better rates.  In the real world, the underwriters may take other influencing risk factors into consideration.  In other words, if you have any health related issues that have changed since you first purchased your insurance, even if you have stopped smoking, they may deny your request.  At first this may seem unfair, but you have to understand that underwriting is a judgment of risk.  Although your life may be healthier because of your non-smoking status, you may have greater health risks because of newly found factors such as heart disease, cancer, or any other issues that may influence your health.  If they do approve you as a non-smoker, your cost of insurance will decrease.  Since you have a cash value life insurance policy, you will have the choice to decrease your premiums or have the additional cash applied towards accumulating more cash value.  Even if the insurance company does not decrease your premiums, assuming the cost of cigarettes never increases and you used to smoke a pack a day, you will save approximately $50,000 over the next 30 years!  Now that’s some serious savings!  Enjoy Life!

Posted in Blog.