The Real Cost of Smoking Cigarettes: How Being a Tobacco User Affects Your Insurance Rates

*Disclaimer: All sample rates mentioned in this article are for reference purposes only. To receive accurate rates for yourself or a loved one, please contact us directly. Rates are subject to change over time, and rates vary depending on age, location, gender, and the like.

It’s no secret that being a cigarette smoker is an expensive habit.

According to Smokefree.org, if you smoke a pack a day, you’re shelling out $177 a week on cigarettes – that’s over $9,200 every year.

But we all know that the cost of smoking goes beyond the actual cigarettes. According to Reuters, for every $10 spent on healthcare in the U.S., almost 90 cents is because of smoking. When you total that up, we’re looking at about $170 billion every year spent on illnesses caused by tobacco smoke.

According to a paper published by the Federal Reserve Bank of Atlanta, smokers earn about 20% less than nonsmokers do. This is mainly because non-smokers are more likely to hold graduate degrees and college degrees, with smokers are more likely to hold GED certificates (Centers for Disease Control and Prevention).

And what about the value of your life? According to the Centers for Disease Control and Prevention (CDC), tobacco use is still the nation’s leading cause of death – and it’s entirely preventable.

But one thing that major publications often forget about is the cost of insurance. You may have noticed that your insurance agent asks if you’re a tobacco user – that’s because it directly affects how much you’ll pay for your health and life insurance.

Tobacco User Rates for Medicare Supplements

When you turn 65, many individuals opt to get a Medicare Supplement (also called a Medigap plan), which can pick up the remaining costs that Medicare leaves behind, like coinsurance and deductibles.

If you’re a tobacco user, you’ll quickly find that smokers get a premium hike.

For example, in the Fort Wayne area, a 65-year-old female nonsmoker would pay around $90 for a Medigap Plan G, while a smoker would pay over $100.

And as you age, the price gap only gets more painful. That same nonsmoker at age 75 would pay around $115, while the smoker would now pay closer to $140.

If you’re a male, your rates are unfortunately going to be even higher due to the fact that men tend to die slightly younger than women.

A 65-year-old male that was not a tobacco user would pay around $102 for a Medigap Plan G, while a tobacco user would pay nearly $120 for the same plan. And at age 75? The price increases to about $135 for the nonsmoker while it goes all the way up to $155 for the smoker.

Emphysema or COPD

Those that smoke cigarettes are more likely to have lung or respiratory disorders, and unfortunately, these conditions can make the application process more difficult.

If you develop emphysema or COPD, most companies will not accept your Medigap application. You can read about the special circumstances and possibilities in the article Can I still get a Medicare Supplement if I have COPD or emphysema?

Additionally, if the company does decide to approve you, it will likely be under a modified rate class that’s even higher than the tobacco user rate.

Prescription Drug Plan Costs for Smokers

Your monthly premium for your Medicare Part D drug plan stays the same whether you are a tobacco user or not.

However, the prescriptions you take definitely affect your annual drug costs.

For example, if you’ve been prescribed Chantix ® to help you stop smoking, your lowest possible annual drug cost would be just under $600. If you didn’t have to take Chantix, your drug plan would only cost you about $215 per year.

Also, if you have any tobacco-related health conditions, the cost of those prescriptions will also be reflected in your annual drug plan costs.

Some individuals who use tobacco develop asthma and are prescribed Spiriva®, which relaxes your airways and keeps them open. The lowest possible annual drug cost in this situation would be $667, which is about $450 more every year than if you didn’t have to take that medication.

If you were prescribed Spiriva® and didn’t have a Medicare Part D drug plan at all, Medicare.gov estimates that your annual health and drug costs would be about $8,000.

Tobacco User Rates for Medicare Advantage Plans

The one area where you get a bit of a break if you’re a tobacco user is the Medicare Advantage plan. You can read more about how Medicare Advantage Plans compare to Medigap plans here.

In the Medicare Advantage world, regarding the medical portion, smoking has no impact on an individual’s ability to be approved. It also has no bearing on the monthly premium.

Tobacco User Rates for Life Insurance Policies

Life insurance rates are heavily affected by tobacco use. Being a smoker can increase your rates dramatically – sometimes as much as doubling your monthly premium (or more).

Final Expense Premiums for Smokers

Final expense insurance is a type of life insurance that helps seniors cover end-of-life bills, such as funeral expenses and healthcare. You can read more about the need for final expense insurance here.

Let’s say you wanted a $20,000 benefit. A 65-year-old female located in the Fort Wayne, Indiana area would pay as low as $69 per month as a nonsmoker. That same female, if she was a tobacco user, would pay $93.

Let’s now consider an 80-year-old male. As a nonsmoker, he would pay about $223, and as a smoker, that would increase to $304. That’s a 36% increase for the same exact death benefit.

Term Life Premiums for Smokers

Term life insurance is less common in the senior market, because it’s not a very good fit for older individuals. However, there is a rare occasion where term life insurance can make sense.

And unfortunately, tobacco rates for term life are some of the most shocking in the industry.

Let’s say you needed a $250,000 death benefit, and you needed it for a term of 15 years. Perhaps you just bought a home and wanted to make sure the mortgage was covered for your loved ones in case you passed away unexpectedly.

For a 65-year-old male in great health, his monthly premium would be about $157. If he was rated as “standard tobacco,” his rate would be $508. That’s a 223% increase in the monthly premium just for being a tobacco user.

Even if the same male was rated as the least healthy of all the rate classes – “Standard Non-Tobacco” – his monthly premium would still only be $271, which is almost half the cost of a standard tobacco rate.

Permanent Life Insurance Premiums for Smokers

When it comes to permanent life insurance options like whole life, universal life, and life insurance with a long-term care rider, there are typically 2 rate classes offered for smokers:

1. Preferred Smoker
2. Standard Smoker

There is no set percentage of how much more someone will pay because they are a smoker, but the price increase is very significant in all cases.

For example, let’s say a 65-year-old female wants a life insurance policy with a long-term care rider. She wants a $100,000 death benefit.

If she was healthy and did not smoke, her monthly premium would be just under $180 per month. If she was otherwise healthy but was a smoker, her monthly premium would increase to over $315 per month.

If that same female didn’t qualify for the healthiest rate class, but was instead approved under the “standard” rate class, she would pay $232 per month. And if she smoked? That premium would go up to $364 per month.

What Should I Do If I Smoke and Need Health or Life Insurance?

If you’re serious about your health (and your wallet), you might consider quitting smoking. You’ll save yourself a ton of money in insurance costs.

However, in most cases, you’re still able to get insurance – it’ll just be more expensive. Some insurance companies will let you reapply later on if you’ve stopped smoking successfully for at least a year, and that can drastically reduce your insurance costs.

Every situation is unique, so make sure you talk with one of our experts before giving up on health and life insurance altogether. We know the ins and outs of the industry and can often find the perfect fit for you.

Interested in insurance coverage, but not sure about the price? Get a Quote Now.

*Disclaimer: All sample rates mentioned in this article are for reference purposes only. To receive accurate rates for yourself or a loved one, please contact us directly. Rates are subject to change over time, and rates vary depending on age, location, gender, and the like.