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Term Life vs. Whole Life Insurance for Smokers – Which is Best?

Written by Jason Patterson

As a smoker, deciding between term life or whole life insurance is a personal choice, and the “best” comes down to “best for your situation”–including your needs, your budget, and your health. The older you are, the more it will cost for life insurance, but the cost of whole life insurance becomes particularly more expensive when compared to term coverage.

The more health issues you have because of smoking, the higher your life insurance premiums will be. These are all factors you want to consider alongside what your financial goals are; do you want to use your life insurance as an investment tool or just to give you family money when you pass away? These are all important considerations.

Term Life Insurance for Smokers

Term life insurance for smokers is a wonderful policy option that gives you short term coverage, often to coincide with financial needs. For many smokers, this is a more affordable option. If you believe that your financial needs will change with time, consider looking into a convertible Term Policy.

Term life insurance is there for a set amount of time and it provides, at its core, a death benefit. You can typically get coverage between 10 and 30 years, sometimes in ten year increments, other times in annual increments. This all depends on the company. You can enhance your term life insurance policy by adding benefits, called riders, which strengthen the coverage you need in a more customized fashion.

Who is Term Life Insurance Best For? 

Smokers Who Do Not Need Permanent Coverage 

Smokers who do not have a need for permanent life insurance coverage should consider term life insurance. Terms can be layered in a way so that you have varying amounts of coverage throughout your lifetime.

People who need protection for large debts like mortgage, car, and student loans should consider this type of affordable coverage in order to protect their family form their debts in the event of their death.

Smokers Who Cannot Afford Whole Life Insurance 

While whole life insurance comes with some benefits over term life coverage, it also comes at a much higher cost. For many people, this is just simply unaffordable. People who still need coverage but who cannot afford this high cost insurance should consider term coverage.

Who is Eligible for Term Life Insurance?

Anyone with a current life insurance policy, or anyone taking out a new policy is eligible for different riders, based on the company. Some companies will only allow you to take out riders when you get your initial policy while others allow you to add one or two of the riders later. Once that policy expires, you may have the option to add another term or convert your policy into a permanent one.

Some people may be disqualified from traditional life insurance coverage due to health conditions. People in this position can still obtain coverage through no medical exam life insurance policies offered by many companies on the market. This type of coverage is more expensive in terms of $1,000 of coverage, and offers lower face amount policies, but approval is very quick, often within 24 hours or less. Some policies even guarantee coverage no matter what your health is and offer instant approval life insurance for smokers.

Each company has their own table rating system for smokers which determines their risk and premiums based on their health. You may qualify for term life coverage for one company, but not another. For this reason, among others, it is recommended that you work with an independent life insurance agent who can help you compare and shop around for the best life insurance for smokers.

Term Life Insurance Riders 

With any policy you can add a benefit or add-on to which supplements the coverage you have in the basic policy. Benefits are called “riders”.  There are plenty of them but the ones you pick are going to be based upon your needs. The waiver of premium and the guaranteed insurability or the two most common that you should consider.

Most policies will come with one or both but if they don’t have them, we strongly consider that you should add them to your policy. The waiver of premium stipulates that you don’t have to pay your life insurance premium if you become disabled. The guaranteed insurability allows you to add to your death benefit without having to prove any more medical details.

Whole Life Insurance for Smokers

Whole life insurance for smokers is a form of permanent coverage that guarantees coverage for life. This is going to be the more expensive option, but it means guaranteed death benefits. Someone who is looking at potential health problems as a result of smoking might be better off getting whole life insurance now, versus ten years from now when their health has changed and age has increased, which will result in much higher premiums.

Of course, someone who is a smoker, but trying to change their habits might be better off financially getting a term policy now and converting to a whole policy once they are in better health. With whole life insurance as a smoker, you can add more riders than you can with term policies.

Whole life insurance offers life insurance coverage for your entire life. Most policies have a maximum age through which they insure applicants. Typically, this age is either 95, 101, 111, or 121. This all depends on the policy and the company you choose.

These policies accumulate cash value throughout the life of the policy with the premiums you pay in. Whole life policies accumulate this cash value on a steady basis throughout the life of the policy, with a guaranteed rate of return which does not change. This rate all depends on the cost of fees for management of your money, as well as the policy’s stipulations and company’s guidelines.

The benefit of this cash value is that you can borrow against it on a tax-free basis throughout the life of your policy. This can be a very powerful financial tool for people who are investors, business owners or in the real estate industry. If you do not use your cash value, it is added to your death benefit when your policy pays out to the beneficiaries upon your death.

Who is Whole Life Insurance Best For?

Smokers Who Need Permanent Life Coverage

Some people need permanent life insurance coverage to last their whole life. Perhaps they have an estate or trust which needs to be seen through and have taxes paid on it when they pass away. Or perhaps they have children who are permanent financial dependents. Whatever the case, for those who need this type of coverage, whole life insurance may be best for them, however, it is important to understand there are many different types of permanent life insurance for smokers available on the market that all generate cash value in different manners.

Smokers Who Are Looking for an Investment Vehicle with Their Coverage

For those who can afford the higher premiums and who have a higher net worth to protect in the event of their death, whole life insurance may be the best option over term life insurance.

However, as we said above, there are many other types of life insurance coverage which all vary in the way they accumulate cash value. Depending on your goals for the gains your policy makes, whole life may be the best option for you.

Who is Eligible for Whole Life Insurance? 

Whole life insurance coverage is typically only available to people who are 65 years of age or younger. Obviously, as you get older, life insurance rates increase.

Just like with term life insurance, the coverage available to you depends mostly on your health and other risk factors like occupation and lifestyle factors.

People with pre-existing health conditions may be disqualified from this type of coverage as well and should look into no exam life insurance options for smokers.

Riders for Whole Life Insurance

Below are some options for riders, some of which may only be available for permanent policies depending on the company. Many of these riders are also available with term life insurance policies as well, though on average there does tend to be more riders available on whole life insurance policies.

These are all designed to allow you to increase or limit the benefits you get with your policy. The most common options are below:

Rider Features
Accidental death This benefit will pay out an additional amount of your death benefit if you pass away from an accident. Normally the amount you receive is going to be equivalent to the face value of the original policy which basically doubles the total benefit your beneficiaries receive. It is for this reason that sometimes this feature is called the double indemnity benefit.

Different insurance companies will have limited meanings of the word accident and if you are the sole income provider for your family this is going to double the benefits your family gets in the event that you do pass away from a qualifying accident.

Waiver of premium This benefit means that your future premiums are waived, you don’t have to pay them, if you become permanently disabled or you lose your income as the results of an injury or illness. If you are the main Breadwinner and you become disabled it can be incredibly damaging to your family and in this case the benefit exempts you from having to pay the premium until you are able to work again.

This is a very valuable benefit especially if your premiums are very high and different insurance companies have varying definitions of the term totally disabled so you will want to look over the terms and conditions of the benefit you are taking.

Long-term care This provides you with coverage for long term care when/if it is required.
Return of Premium This allows you to receive all of your premiums back in a tax-free lump sum in the event that you outlive your term.
Critical Illness This benefit provides you with a lump sum payment if you are diagnosed with a critical illness. This typically means things like heart attack, cancer, stroke, or paralysis. Your policy might continue normally after you are diagnosed, but in other cases it might terminate based on the type of coverage you have. With this, your death benefit is reduced by whatever lump sum you were given to cover your critical illness costs.
Permanent or partial disability This rider gives you a payment for a set amount of time if you become disabled because of an accident. This is typically combined with the accidental death rider.

Term Life Insurance vs. Whole Life Insurance Costs For Smokers

Below are the average comparative costs for smokers for term and whole policies, at different ages and with different levels of coverage. Keep in mind that these rates are for monthly premiums, and that all rates displayed are for smokers who are otherwise in excellent health. Rates will vary based on age, company, coverage amount, health, medical history, family history occupation, and lifestyle factors.

Age Policy Type $100,000 Male  $100,000 Female  $500,000 Male  $500,000 Female  $1,000,000 Male  $1,000,000 Female 
35 10 Year Term $20 $18 $56 $46 $98 $82
35 20 Year Term $26 $22 $88 $73 $170 $130
35 30 Year Term $35 $28 $145 $104 $275 $202
35 Whole Life $208 $176 $704 $584 $1,360 $1,040
40 10 Year Term $26 $23 $81 $65 $146 $119
40 20 Year Term $37 $33 $133 $105 $249 $201
40 30 Year Term $52 $41 $216 $156 $425 $299
40 Whole Life $296 $264 $1,064 $840 $1,992 $1,608
45 10 Year Term $34 $30 $132 $99 $240 $181
45 20 Year Term $53 $44 $209 $163 $407 $312
45 30 Year Term $84 $62 $347 $249 $687 $482
45 Whole Life $424 $352 $1,672 $1,304 $3,256 $2,496
50 10 Year Term $50 $41 $198 $149 $355 $274
50 20 Year Term $80 $62 $327 $239 $622 $459
50 30 Year Term $116 $94 $530 $398 $1,050 $775
50 Whole Life $660 $550 $2,783 $2,156 $5,269 $4,059
55 10 Year Term $75 $58 $309 $212 $536 $398
55 20 Year Term $122 $90 $514 $363 $1,001 $698
55 30 Year Term no policy available no policy available no policy available no policy available no policy available no policy available
55 Whole Life $1,023 $770 $4,213 $3,223 $8,261 $6,061
60 10 Year Term $118 $85 $477 $326 $854 $612
60 20 Year Term $174 $135 $767 $547 $1451 $1,085
60 Whole Life $1,416 $1,020 $5,724 $3,912 $10,248 $7,344
65 10 Year Term $173 $130 $762 $491 $1426 $945
65 20 Year Term $324 $259 $1,302 $1,033 $2,485 $1,969

Term Life Insurance vs. Whole Life Insurance – Side-by-Side Comparison 

In order to compare permanent policies with term policies you need to directly compare the short and long-term cost of both based on factors like whether you are a smoker, how old you are, and the face value you want to purchase.

You might find that the out-of-pocket expenses for a whole life insurance policy seem daunting especially when compared to term life insurance policy. But that is because the money you put into that Term Policy only gives the death benefit to your beneficiaries if you pass away during that specified turn. Comparatively the money you put into a whole life insurance policy will build cash value that you can use later on.

Also remember that in many cases the benefits or riders that you receive from different companies are going to be much more extensive with a whole life insurance or permanent policy then they would be for a Term Policy. In fact, many companies will offer certain benefits free of charge with the permanent policies but for Term Policy if you have to pay extra for these. So, if you want coverage for your children under your policy or for your spouse, the children’s feature or the spousal feature might cost you significantly more with a Term Policy than it would for a permanent policy.

When comparing the cost look at the long-term cost you might pay.

Example 1:

If, for example, you are 35 years old right now and you are offered a Term Policy that cost $10 per month, but that term expires in 20 years, you are going to pay a total of $2,400 over the course of those 20 years and that’s not including any extra features. This is for $100,000 in coverage as a male who is otherwise very healthy and in the preferred category.

By the same token if you were to take out a whole life insurance policy you would pay, for the sake of argument, $75 every month. This means $900 every year for the same $100,000 in coverage, at the preferred rate. You would receive a level premium, so that $900 per year is going to remain the same until you die.

Short term, the term policy looks more attractive financially but now let’s look at the long-term.

When your policy expires 20 years from age 35 you are now 55. Chances are your health is not the same at 55 as it was at 35.  Something like high cholesterol, obesity, even high blood pressure will increase your prices significantly. At this point if you were to take out a policy you might want something permanent. But for the same $100,000 in coverage you would be paying $300 per month for the rest of your life. This means $3,600 per year.

Let’s assume you passed away at the age of 80.  By that token you live another 25 years.

If you took out a 20-year Term Policy and at its expiration converted to a whole policy the total amount you pay over the course of your life would equal $2,400 that you paid for the first 20 years of the term policy, and $90,000 that you paid for the remaining 25 years of your whole life insurance policy.

With the whole life insurance policy that you took out at age 35, over the course of the next 45 years at $900 per year you would only have paid $40,500. This is less than half the cost long-term.

Finding the Best Life Insurance Coverage for Smokers 

On average, smokers will pay anywhere from 3-5 times more for life insurance coverage than non-smokers. This makes your choice of policy very important, because the goal is to get the best protection for your family at the most affordable rate.

As a result, we always recommend working with an independent agent who is not attached to any one company, but who works with a multitude of the best life insurance companies for smokers in order to help you find the best coverage for your situation.

Our agents do exactly that. We work with some of the best term and whole life insurance companies for smokers on the market and can help you find the life insurance policy that is best for you and your loved ones. Give us a call today to speak with an expert, or get started online using our instant life insurance quote engine to find quick and easy life insurance quotes for smokers.

About Jason Patterson
About Jason Patterson

Jason Patterson has been in the insurance industry for over fifteen years. Starting in 2005, he became one of the first agents to sell medicare supplements online. From that small start, he grew an agency that helped thousands of people with their insurance needs in all fifty states.

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