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Turn ash into cash

Gregor Watt smokes out the savings that can be made on insurance premiums by giving up tobacco


The figures available on the health and financial impact of smoking set out in stark contrast the scale of the problems that still face the UK due to tobacco use.

Last week saw the annual National No Smoking Day but almost three years on from the ban on smoking in the
workplace, the number of people still smoking is remaining stubbornly above 20 per cent. According to figures from the Office of National Statistics, the number of people who smoke has changed very little in the last 10 years. In 2000, around 26 per cent of the population smoked regularly, with the figures for men and women, exactly the same.

By 2007 this figure had dropped to an average of 22 per cent, with slightly more men than women smoking at 24 per cent and 20 per cent respectively. The most recent figures for 2008/09 show these figures have remained almost unchanged since then, with 22 per cent of the population still classed as smokers.

Figures from the Department of Health show there is some progress being made. It says in 2009, 337,000 people managed to give up smoking while the ONS suggests that 67 per cent of smokers actively want to give up smoking.

But the impact of smoking continues to be felt, with 80,000 deaths a year attributed to smoking and the cost to the NHS an estimated £2.7bn.

In an effort to cut the level of smoking even further, the Government recently announced a new initiative designed to cut the number of smokers by half, from its current level to 10 per cent of the population by 2020.

The Government initiative will concentrate on stopping young people picking up the habit in the first place by cracking down on cheap, illegal imports, stopping the sale of tobacco through vending machines and it is considering a change to the packaging of cigarettes. It has also restated the commitment to provide free help with quitting through the NHS.

Health Secretary Andy Burnham said: “Most smokers start before they are 18, so we have to discourage children and young people from ever starting. Now that we have banned advertising and will soon see an end to attractive displays in shops, the only remaining method of advertising tobacco is the packaging, so we will carefully consider whether there is evidence for making tobacco companies use plain packets.

“We will always help people to quit and smokers should never stop trying. That is the beauty of the NHS – it is there to help everyone. One day, in the not too distant future, we will look back and find it hard to remember why anyone ever smoked in the first place.”

National No Smoking Day is in its 27th year and to mark this year’s event, the NHS has launched an iPhone application to help people give up the evil weed. One of the functions of the application is a rolling clock that shows how long you have managed to stay off the fags and how much money you have saved. For someone who smokes 20 cigarettes a day, this works out at 1p every one minute and 45 seconds and can quickly add up to significant savings. Over the course of a year, this equates to over £2,200 a year.

In addition to not dying early, there are other advantages. Of most relevance to IFAs is the savings for life insurance and critical-illness premiums available once a client has given up smoking for a year.

For any of the 337,000 people who manage to quit every year, the savings can quickly stack up.

According to, a 30-yearold male non smoker looking for £150,000 of cover could save over £6,000 over the full 25-year term of a combined life and critical-illness policy, or over £1,600 on a single-life insurance policy.

A 30-year-old women could also make substantial savings, as quitting smoking could save over £3,600 on the cost of a 25 combined life and criticalillness policy or almost £1,200 on single-life cover. head of protection Emma Walker said: “It is crucial smokers seriously consider both the medical and financial benefits of quitting, instead of letting their hard-earned cash go up in smoke.

“There are real savings to be made by kicking the habit and shopping aro und for the best insurance deal to suit your circumstances.”

Independent financial research service Defaqto says that life insurance premiums can be less than half the price for non-smokers than for smokers.

Defaqto insight analyst Ben Heffer says: “For a male aged 25, wanting £100,000 of life insurance, if he smokes, it will cost him on average 62 per cent more than if he is a non-smoker.

“Typically, for a 25-year-old in good health, £100,000 of cover costs between just £5 and £7 per month, roughly the cost of 20 cigarettes, while
a smoker could pay as much as £10 or £12 a month.”

To be classed as a non-smoker, insurers usually have a strict period of 12 months for a customer to have given up smoking before they can be classed as a non-smoker.

Heffer says: “Most insurers will class you as a non-smoker if you have not smoked cigarettes, cigars or pipe tobacco for 12 months but it is important that you are truthful on the application form because if you do not disclose the full facts, your cover could be invalid.”

But for anyone struggling to kick the nicotine habit entirely, Heffer points out that there are some insurance providers which offer financial incentives for people who are trying to quit.

HSBC Life, Police Mutual and Scottish Provident all offer non-smoker rates to people who wear nicotine patches.

Heffer says: “Smokers should also be aware that there are still savings to be had with the right providers for efforts to give up or stop.”

But Lifesearch senior policy adviser Matt Morris warns that it is wise not to cancel an existing policy before you have a new one lined up, as the change in smoking status is not the only thing which may have changed.

Morris says: “It is important to have a new policy in place before cancelling the existing one, as a new policy could turn up some nasty surprise
in underwriting and may even be declined if your health has changed.”



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There is one comment at the moment, we would love to hear your opinion too.

  1. How on earth can you offer non-smoker rates to people wearing nicotine patches – the relapse rate must be significant. This is just ridiculous – good luck to smoker applicants who wants to take these companies to the cleaners.

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