UP IN SMOKE Life insurance costs more for those who light up


If YOU'RE A SMOKER, you can expect to pay more -- in many cases a lot more -- for life insurance.

While there may be rate differentials for health and disability insurance as well, the biggest gaps show up in life insurance products, said Albert R. "Skip" Counselman, president of Riggs, Counselman, Michaels & Downes, the largest independent insurance agency and broker in Maryland.

Differentials for health insurance are not anywhere as widespread or as large, primarily because most people are covered under group plans. Since premium costs are based on a group's claims, they reflect whether a large number of employees suffer from smoking-related illnesses, said Harvie Raymond of the Health Insurance Association of America.

While smokers can expect to pay more for life insurance, they can benefit by shopping around.

"There will be tremendous differences ranging from company to company," Counselman said.

"It definitely has an impact," echoed Gene Grabowski, spokesman at the American Council of Life Insurance, a trade group. "Some companies are very particular."

At Baltimore Life Insurance Co., for instance, a 45-year-old non-smoker -- defined for insurance purposes as a person who hasn't smoked for at least a year -- will pay $2.92 for every thousand dollars of coverage for a five-year term policy. But a smoker will pay $5.84 -- double the non-smoker's rate -- for the same policy. A whole-life policy, in which a cash value accumulates, will cost the same non-smoker $20.39 for each $1,000 while the smoker will shell out $27.44.

David S. Sachs, senior vice president at Baltimore Life, cheerfully acknowledges that the company's differential is on the high end.

"We often hear from our brokers that are smokers' rates are a little high," he said, but added that Baltimore Life is not anxious to write a lot of life insurance for smokers.

The reason is obvious: Smokers are more likely to die sooner.

L "The underlying mortality rate is about double," Sachs said.

At Monumental Life Insurance Co., a Baltimore-based company owned by the Dutch company, AEGON nv., smokers also pay approximately double the rate of non-smokers.

"The policy premiums for non-smokers are generally about half of smokers," said Rosemary Kostmeyer, director of communications.

Despite the large differential in rates, neither company thought it had much of a problem with smokers signing on as non-smokers.

"We have tests," said Sachs at Baltimore Life.

For smaller policies applicants have to sign an application that certifies the information they have given, including their status as smokers or non-smokers, is true, Sachs said. Baltimore Life also conducts random telephone surveys, he added.

For larger policies, both companies require physicals that include a urine test for nicotine.

At the Baltimore area offices for Mutual of Omaha, Kathie J. Herbst, a registered representative, said the difference between smoker and non-smoker rates range between 40 and 60 percent.

"The younger you are, the lower it is," she said.

Mutual of Omaha requires health exams for all its policies, Herbst said.

Massachusetts Mutual Life Insurance Co., the 10th largest life insurer in Maryland according to spokesman Joseph Mondy, charges a 45-year-old a whopping 130 percent more for term insurance if he is a smoker.

A male non-smoker would pay $2.08 for each $1,000 of coverage; a smoker $4.80, Mondy said.

"If you quit for a year, you get knocked back to the non-smoking rate," Mondy said.

Sally Leimbach, a vice president in RCM&D;'s financial services department, said a smoker shopping for life insurance should be able to find policies with differentials of between 10 to 30 percent.

"If you're a smoker looking for life insurance, you really need a knowledgeable broker that can find the best company," she said. Independent brokers and agents shop for the best rates among a number of companies and are paid commissions by the insurance companies.

For instance, she said, one company that normally charges low rates for term insurance boosts the differential to 60 percent for a 40-year old smoker.

People buying policies of more than $100,000 can expect to have to undergo a medical examination that includes a blood test; those who have reached 40 may also find a blood test is required, Leimbach said.

"They've gotten a lot more stringent because of the AIDS situation," she said.

Raymond, of the Health Insurance Association, said some health insurers offer non-smokers a discount of 15 to 20 percent.

Mutual of Omaha, the biggest individual health insurer in the nation, currently gives non-smokers a 10 percent discount and plans to make that 20 percent in April, when it will seek a rate increase, said Herbst. It also gives non-smokers a 10 percent discount on disability insurance, as does Mass Mutual.

Carole Waters, of Maryland Blue Cross/Blue Shield, said the insurer currently does not charge different rates for individual policies.

"It has been discussed. . . . Nothing has been decided," she said.

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