One injustice in the life insurance world is that people who are non smokers, who have recently quit, still have to pay tobacco ratings, which are at least double the premium of non tobacco rates. For example, if you haven’t touched a cigarette in 6 months, the best offer you’ll get from most carriers is Preferred Tobacco. In most cases, you must have quit for over 1 year to get back to Standard Non Tobacco rates. Then for each year you stay away from cigarettes, you climb the ladder of rates available to you, starting with Standard Plus after 2 years, then Preferred after 3, then Preferred Plus after 3 to 5 years with most carriers.
I think it’s unfair that non tobacco users should be classified this way. RBC, also known as Liberty Life, has done something about it. They will now consider non smokers for their best rating, Preferred Plus Non Tobacco, after only 12 tobacco-free months! How big of a deal is this? Huge!
Take a 50 year old who quit smoking 12 months ago, but is otherwise in great health and a preferred risk for insurance carriers. If he wants a 20 year level term with a $500,000 face value, the best he’ll do anywhere besides RBC/Liberty Life is at American General where he’ll be rated at Standard Non Tobacco and pay $1714 annually. If he went to RBC/Liberty Life, however, he could get Preferred Plus and pay just $1260 annually for the same coverage!
So, attention all cigarette smokers who are getting ripped off on life insurance. Here’s an incentive… quit now, and after 12 short months, you can get the same rates as your non smoking Olympic athlete neighbor.
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