Ex-smokers who took out life insurance while they were still smoking could save a packet on their life insurance premiums by reviewing their cover 12 months after they smoked their last cigarette. In one example one man saved over £5,000 by switching his life insurance policy after he quit smoking.
There are around 10 million ex-smokers in the UK, with around 130,000 who gave up in the last year. If they did not think to review their life insurance many of them could be paying bigger premiums than they need to.
Insurers generally rate customers as non-smokers if they have not smoked in the previous 12 months. So even if they once had a regular 40 a day habit, one year later they will be rated as non-smokers and they could pay substantially less for their life insurance, even if they have put on a few years since taking out their policy.
Someone who took out life insurance 5 years ago as a smoker and has since given up they could reduce their premiums by as much as 60%. This could save them hundreds if not thousands of pounds over the term of the policy. For example: In 2005 a 44 year old man took out £125,000 of level term life insurance for a 20 year term. At the time he was a smoker and his premium was £47.76 per month. Now, five years later, he has given up smoking for over 12 months and although he is five years older he is still in good health and can now get £125,000 of level term life cover for the remaining 15 years of his original policy for a premium of just £18.34 per month. That's a saving of £29.42 per month over the next 15 years amounting to a total cost saving of £5265.60.
Ray Black, of life insurance comparison site www.money-minder.com, says, “Anyone who gave up smoking over a year ago should look at what it would cost to switch their insurance now they are a non-smoker. The saving could be huge."