Most people are aware of the health benefits of giving up smoking, from reducing the risk of serious illnesses to improving overall wellbeing. Many may not realise that quitting can also have a significant impact on their finances, particularly when it comes to protection insurance and long-term financial goals such as homeownership.
Protection insurers assess a range of factors when calculating individual premiums, and somebody’s smoking status remains one of the most important details. As a result, smokers can face considerably higher costs for life insurance and critical illness cover compared to non-smokers.
Main protection insurance categories
Insurers typically group applicants into three categories which include smokers, ex-smokers and non-smokers. Smokers are generally anyone who has used cigarettes, cigars, tobacco or nicotine products, including vapes, within the past 12 months. Ex-smokers are those who have quit but have not yet been nicotine-free long enough to qualify as non-smokers. Once someone has been nicotine-free for at least 12 months, many insurers will consider them a non-smoker, potentially giving them access to lower premiums on products such as life insurance, critical illness cover and income protection.
The additional costs
To put the costs into a real-life scenario, based on a 35-year-old taking out £250,000 of cover over 25 years, the cheapest available life insurance premium for a non-smoker is £11.96 per month. For an ex-smoker, that rises to £14.42 per month, while for a smoker it increases to £22.81 per month, making cover almost twice as expensive for a smoker compared with a non-smoker. When critical illness cover is included, premiums increase from £84.74 per month for a non-smoker to £87.57 for an ex-smoker and £120.93 for a smoker, a difference of more than £36 each month or £434 a year between a non-smoker and smoker.
There is currently very little difference between non-smoker and ex-smoker pricing, with life-only cover starting from £11.96 per month and life and critical illness cover from £84.74 per month. Not all insurers currently offer the same approach to ex-smokers across all products, so it’s important to understand your options with a trusted adviser.
Financial impact of smoking
According to NHS estimates, someone smoking 20 cigarettes per day could spend more than £5,000 a year on cigarettes alone. Combined with lower protection insurance costs, the financial benefits of quitting can quickly add up.
For aspiring homeowners, redirecting those savings into a house deposit could make a meaningful difference. Someone saving £400 per month from giving up smoking and reducing insurance costs would build up £4,800 over a year and over five years, that's £24,000 before any interest or investment growth is taken into account.
While improving health is the main motivation for most people taking part in Stoptober, the financial advantages should not be overlooked. Whether it's improving access to affordable protection insurance or helping build a deposit for a first home, quitting smoking could put people in a stronger position both physically and financially.
Our expert advisers can help you compare life insurance, critical illness cover and income protection to find the right cover for you and your family. Get in touch to discuss your options.
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