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Why e-cig users could be paying too much for their life insurance

Why e-cig users could be paying too much for their life insurance

Feb 9, 2017

If you smoke, you’ll pay more for your life insurance. This is a simple fact and is based on careful statistical calculations about the relative life expectancies of smokers and non-smokers.

What this means is that young smokers can expect to pay significantly more for their life cover – up to twice the standard premium in some cases.

Being a smoker also pushes up the cost of other protection such as critical illness cover and income protection. But what if you ‘smoke’ e-cigarettes? Early research into vaping has revealed that it is much less harmful than smoking traditional cigarettes and yet if you admit to being an e-cigarette user your insurer is likely to bump up your premiums as if you were a smoker. Keep reading to find out more.

E-cig users treated as smokers by life insurers

‘Vaping’ and e-cigarettes have helped many heavy smokers to give up in the last few years. Indeed, a recent report by the UK government suggested that vaping is around 95 per cent less harmful than smoking regular cigarettes.

However, the insurance industry has yet to make a distinction between e-cigs and traditional cigarettes. When you take out a life insurance policy you will almost certainly be asked if you have ‘smoked any tobacco products over the past 12 months including e-cigarettes’. If you answer ‘yes’ then you’ll be treated as a smoker and your premium will be significantly more expensive.

James Daley from consumer group Fairer Finance believes that this practice is wrong. He says: “If the life insurers were able to base their decision in statistics – this decision may be more defensible. But given that they don’t even ask people to specify whether they vape or smoke – they don’t even have the data.

“It’s hard to see this as anything other than a cynical ploy to pocket a few extra quid.”

While e-cig users may be paying more than they should for their life insurance, there are other similar medical anomalies that can unfairly push up the price of your cover. We look at these next.

Consumers champion calls on regulator to look at how insurers determine prices 

When you complete a life insurance application you’ll have to answer lots of questions about your health and lifestyle. You’ll have to share details of your alcohol consumption, height and weight and family medical history and these responses will help an underwriter to determine the risk and the cost of your cover.

However, insurers will also generally ask if you have ever suffered from ‘stress’. While everyone will generally have suffered with stress at some point in their lives, answering ‘yes’ to this question may result in a higher premium as you’ll be, as James Daley says, ‘shoved into the mental health problems bucket’.

The consumer champion has called on the regulator to look into the way insurers determine the cost of cover in all areas of insurance. He concludes: “There are too many areas where the evidence is simply not clear enough to justify the way that insurers choose to treat prospective or even existing customers.

“One of my greatest bugbears is an insurer’s right to put your car insurance premium up if you’re involved in an accident that wasn’t your fault. Regardless of whether the statistics justify their reasoning, it’s simply not fair play.”


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