How Smoking Affects Your Life Insurance Rates In Canada: Discover the Impact of Smoking on Insurance Costs and Premiums for Canadians. Smoking can have a significant impact on your health and your wallet. Generally, non-smokers enjoy fewer medical complications and far lower premiums, making coverage more affordable. But what if you start smoking after getting life insurance, or if you don’t smoke but use nicotine products? Your nicotine consumption may still affect your premiums, and non-disclosure can have serious consequences.
Impact Of Smoking On Life Insurance
If you start smoking after getting life insurance, it usually won’t raise your premiums immediately. However, if you develop medical complications due to smoking, your insurer might void your policy or deny a claim.
If you quit smoking after getting your life insurance policy, you can typically ask to have your premiums reassessed if you’ve been nicotine-free for at least 12 months.
Occasional cannabis use is often not considered as serious as tobacco usage by life insurers and may not result in increased premiums. However, the frequency of usage should always be disclosed because heavy usage (smoking cannabis more than four times a week) can result in smoker rates.
It’s important to clarify how your provider will consider your tobacco and cannabis use, as this will affect the cost of your life insurance.
What Do I Do if I Started Smoking After I Got Life Insurance?
If you started smoking after getting life insurance, it’s best to disclose it to your life insurer. Smoking has negative health effects that increase the risk of providing coverage, which is why smokers have higher insurance premiums than non-smokers.
For those who have term insurance policies, disclosing their new smoking habit will be mandatory for policy renewal. Additionally, failure to disclose that you now smoke can cause your policy to be voided, whether it’s a term life insurance or a permanent life insurance policy.
If it’s shown later on that undisclosed smoking contributed to your cause of death, your insurer may delay your beneficiaries’ claim or reduce the payout. Worse, they may consider it fraud or misrepresentation and deny the claim altogether. Avoid these complications by talking to your life insurer and asking how smoking will affect your current policy.
How Much More Do Smokers Pay for Life Insurance?
Smoking comes with a price. Life insurance rates can be much more costly for smokers compared to non-smokers. For example, let’s take a 30-year-old, non-smoking man with a $700,000, 20-year term life insurance policy. He might get quoted a monthly premium of $50.13. But if he turns out to be a smoker, his monthly premium could become $98.01.
Who is Considered a Smoker by Insurance Companies?
Canadian insurance companies generally consider the following people as “smokers” when determining life insurance quotes:
- People who smoke cigarettes, cigars, cigarillos, and pipes.
- Individuals who use chewing tobacco.
- Those who use e-cigarettes and vaping products.
- Anyone who’s used nicotine products for smoking cessation, such as patches or gum.
Even “social smokers” (those who only smoke in certain social contexts) or those who use nicotine gum or patches are considered smokers. This is because when assessing your health risk, your life insurer may ask you to undergo a medical test to measure your nicotine levels. For insurance purposes, it’s not how you consume nicotine that matters but the amount in your body.
What Happens if You Lie About Smoking on a Life Insurance Application?
Lying about smoking on your life insurance application is considered fraud by insurers and can cause your application to be denied. If you’re caught lying after the application has been approved, the policy may be considered void so you won’t get any coverage or benefits.
Canadian insurers can check the Medical Information Bureau to track data from previous life or health insurance applications. Lying can also impact future insurability. Other insurers may see in the records that you lied about your smoking, which may result in coverage limits, higher quotes, or even outright denial of your new applications.
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If you’re concerned that disclosing your usage may make it difficult to get coverage, consider getting simplified or guaranteed life insurance. Simplified life insurance only requires a basic health-related questionnaire, while guaranteed life insurance doesn’t require a questionnaire or medical exam. These alternatives are more expensive than traditional life insurance, but they’re convenient for high-risk individuals to get coverage and financial security for their loved ones.
How to Buy Life Insurance?
Ready to get life insurance? In most provinces, you can purchase life insurance online or through an advisor.
Before purchasing a policy, take time to understand the difference between buying life insurance online and from an advisor.
Usually, when you buy life insurance through an advisor, the policy you’re applying for will go through the underwriting process. The underwriting requirements depend on many factors, including your age and how much insurance you’re looking for. The older you are and the more insurance you’re looking for, the more rigorous the underwriting. Buying guaranteed life insurance online, however, typically requires no health information from you, other than whether you’re a smoker.
Top 5 Best Life Insurance Company
- Manulife Financial Corp.
Manulife Financial (MFC) is the biggest insurer in Canada, and it provides clients with financial advice as well as insurance. Headquartered in Toronto, Manulife Financial had $2.155 trillion CAD ($1.58 trillion U.S.) of assets under management and administration as of Dec. 31.
In 2020, it pulled in $19 billion CAD ($14 billion U.S.) of revenue from payment on coverage subscribers and other forms of insurance returns plus interest earned from those payments.
- Great-West Lifeco
Great-West Lifeco is a financial services holding company located in Winnipeg, Canada. The Company has six subsidiaries: The Great-West Life Assurance Company (Great-West Life), London Life Insurance Company (London Life) and The Canada Life Assurance Company (Canada Life); Great-West Lifeco U.S. Inc.; Putnam Investments, LLC (Putnam), and Irish Life Group Limited (Irish Life).
Great-West Lifeco had total assets of C$701.45 billion ($514.36 billion U.S.) as of 2022. It earned C$44.66 billion ($32.79 billion U.S.) in revenue, which includes money made from insurance premiums, deposits and investment yields like dividends.
- Desjardins Group
Insurance provided by Desjardins Insurance refers to Desjardins Financial Security Life Assurance Company, a provider of life and health insurance and retirement savings products. Desjardins Insurance is also the generic term used to designate Desjardins General Insurance Inc., a provider of auto, home and business insurance..
In 2022, it had 58,774 employees and 7.5 million members and clients. At the end of 2022, its total assets were C$407.1 billion ($298.78 billion U.S.). Its total income was C$18.04 billion ($13.23 billion U.S.).
- Sun Life Financial
Sun Life Financial (SLF) is based in Toronto and is one of the oldest insurance providers, having been established in 1865.
It offers health insurance policies, investment products, and wealth management services. The company has clients in Asia and the United Kingdom, as well as in North America.
Sun Life Financial had 52,400 employees, 85 million clients, and 97,400 advisors as of the end of 2022. Its total assets were C$330.9 billion ($242.66 billion U.S.).
- Fairfax Financial Holdings
Fairfax Financial Holdings has its headquarters in Toronto, Canada. Its major focus is property and casualty insurance and reinsurance, plus the related investment management.
As of the end of 2022, Fairfax Financial had total assets of US$92.12 billion. Total revenue was US$28.05 billion.
Smoking can greatly affect your life insurance rates in Canada. If you smoke or use nicotine products, you should disclose it to your life insurer to avoid complications. Non-smokers usually enjoy lower premiums and fewer medical complications. It’s essential to understand how smoking and nicotine use impact your life insurance rates and to choose the best insurance provider to meet your needs.