Congratulations. You’re a quitter. You’ve taken the difficult task of kicking the habit and now you want better rates on your life insurance policy. Not so fast Charlie - unless you haven’t picked up a cigarette in at least the last 12 months, you’re not eligible for non tobacco life insurance rates. In this blog post I’ll give you some tips for how to save money on life insurance if you have recently quit smoking, but haven’t hit the 12 month mark yet and are not eligible for non smoker rates.
Smoker rates for life insurance can be 2-3 times as much as non smoker rates, so naturally you’ve quit smoking and want to get a policy with non smoker rates. However, life insurance companies know that many people who quit early on, pick up the habit again. This is why you have to be smoke free for 12 months or more to be eligible for non smoker rates.
So what should you do? You know you need a life insurance policy, but perhaps you quit 6 months ago. Should you wait another 6 months before applying 
for coverage, or should you just pay smoker rates? Before I give you my recommendation, let’s take an example of a 35 year old male applying for a $500,000 30 year term life insurance policy - and compare pricing between Standard Non-Smoker and Standard Smoker Rates: The best Standard Non Smoker rate would be $895 annually, compared to $2,160 for Smoker rates - A difference of $1,265 per year!
The big difference between smoker and non smoker rates, might lead you in the direction of saying ‘I’ll just wait until I’ve quit for 12 months and I’ll apply then’. However I don’t think that is the best solution. While you will save money by waiting several more months, you’re still leaving yourself and your family unprotected.
Here is my recommendation. If you’re really serious about quitting and know that you will make the 12 months mark as a non smoker, I recommend you temporarily get a short term life insurance policy. Instead of buying a 30 year term policy as a smoker you can purchase an annual renewable policy. The difference between the two is that with a 30 year term policy, you lock in the rate, which stays the same for 30 years.
With an annual renewable policy you only lock in the rate for 1 year, and your life insurance rate will increase every year. This is not a good long term solution. However, the plan would be to purchase an annual renewable term policy as a smoker, and once you reach 12 months as a non smoker, you would then buy a 20 or 30 year term policy at non smoker rates, and lock in the price. Let’s take a look at how this strategy saves you money.
We said earlier that a $500,000 30 year term for a 35 year old male smoker would be $2,160 annually - compare that to an Annual Renewable Term for the same amount, which would be $210 Annually! A Savings of $1,950!
By choosing an Annual Renewable Term, you accomplish an immediate need of having a $500,000 life insurance policy, while at the same time saving a significant amount of money, with the goal of getting a non smoker policy when you reach 12 months of being a non smoker.