Smokers are not only putting themselves at risk with their daily habit, but they’re increasingly putting their families at risk, too.
Life insurance comparison service xLife.com.au has revealed that smokers account for just 7.7% of life insurance policies.
While smokers typically pay more than non-smokers for life insurance – sometimes by as much as 70% – CEO of xLife Russell Cain says that price isn’t the sole driving factor when it comes to the low rate of uptake from smokers.
“Non-smokers are generally more health conscious than their smoking counterparts,” Cain says.
“When we’ve gone through the statistics and how much they’re spending on cigarettes every year, we don’t think it’s the money that’s the concern. We think it’s more the smoker just going ‘it’ll be ok, it’s never going to happen to me’ situation.”
A pack-a-day smoker is likely to pay around $6,000 per year for their cigarettes (based on an average pack of cigarettes costing $17.15 according to the Cancer Council). A typical life insurance policy for $1 million can cost from $557 per year for non-smokers and $956 per year for smokers, according to xLife.com.au.
Cain did stress that if price was a motivator, by quitting smoking for 12 months, clients could potentially save up to 70% on their insurance premiums.
Advisers can and should play a fundamental role in educating their clients not only about the financial implications, but also the health implications of smoking, says Cain.
“The statistics are staggering and I totally agree that advisers have got to be communicating to their clients the benefits of giving up smoking not only from a money perspective, but also from a health perspective,” says Cain.
He says that an information session from an adviser could be like the final straw on the camel’s back.
“At some point the message does get through.
It’s definitely something that you should be mentioning to clients, because whether you’re funding your insurance inside or outside of super, you’re fundamentally going to be eroding your income…If it’s through super, you’re going to have less to retire on because your premiums are higher, however, if it’s outside super it’s going to be costing you more money and less disposable income for the family.”