Q  I have had a Term Life insurance policy for 8 years.  At the time I took out the policy I was a smoker.  I gave up the cigarettes 15 months ago and haven’t smoked since.  I understand I can apply to have my premiums reduced to non-smoker rates.  What happens if I take up smoking again? Do the rates go back to smoker rates? I am 49 years old and I am insured for $1 million.


no-smoking-sign Life insurance policies are typically issued at smoker and non-smoker rates.  At the time of applying for insurance, you would have completed a personal questionnaire that asked you about your health and lifestyle habits such as alcohol consumption and smoking.  On the basis of this questionnaire, the insurance company issued you a policy that took into consideration your habits at the time.  This assumes that you applied for cover and the policy wasn’t issued as a result of automatic cover issued by the insurer.

Subsequent to the commencement of the policy, your circumstances changed as you gave up smoking.  In order to be considered a non-smoker, most insurers require you to have ceased smoking for more than 12 months.

You need to complete a non-smoker declaration that updates the insurer on your current smoker and health status; When did you cease smoking? Did you cease smoking as a result of a specific medical reason either caused or related to smoking?

When completing this questionnaire, you have a duty to tell the insurer anything you know or could reasonably be expected to know that may affect their decision to insure you.

Provided that you have made the declaration in good faith and your answers reflect your current circumstances, then you should be entitled to non-smoker rates.

By giving up smoking, the cost savings in Life Insurance premiums is quite substantial.  For example as you are turning 50 and you have a $1 million policy, the non-smoker rates are around 45% of the cost of smoker rates.  This is fairly consistent with most insurers.  I wonder if there is a message there?

If you do not answer the questionnaire truthfully or omit to tell the insurer information that may have affected their decision to insure you, then you run the risk that the insurer may cancel the policy, vary the terms of the contract or reduce the amount that they may pay in the event of a claim.

Interestingly if you subsequently took up smoking again, your policy may not revert to smoker rates.  Generally speaking there is no requirement for you to notify the insurer that you have recommenced smoking and you will keep your non-smoker status for the calculation of premiums.  But please check with your provider.

However if you were to apply to increase the amount of insurance under your policy, the insurer would issue a separate policy at smoker rates.  This is on a similar basis to someone who applies to increase their insurance and the increase is offered on special terms due to a change in health since they took out the original policy. For example high cholesterol or high blood pressure.

The key point is to recognise that you have a duty to disclose the truth to the insurer. As a general rule, if you feel that you omitted to disclose information to the insurer at the time of application, or your circumstances have changed that would make the assessment of your insurance more favourable, contact the insurer for a review of the cover.