Mind Your Money: Quit smoking and lower your insurance premium

In the new year, many of us embarked on the journey of self-improvement, setting resolutions that promise a healthier, wealthier, and happier life. While gym memberships and diet plans often take centre stage, there's a resolution that could significantly impact your health, as well as your financial well-being: Quitting smoking. Beyond the obvious health benefits, kicking the smoking habit could unlock unexpected financial advantages, particularly when it comes to your insurance premiums.

From a financial planning perspective, let's examine the lesser-known connection between quitting smoking and reduced insurance premiums, specifically in our dynamic Middle Eastern landscape. So, how does smoking impact your insurance premiums and quitting adds extra dirhams to your pockets?

Let's start with a cold, hard fact

Smoking poses a significant risk to your health, and insurers are acutely aware of this. Around the world, insurance companies factor in lifestyle choices, like smoking, when calculating insurance premiums. Vaping, chewing tobacco, hookah, chewing nicotine gums, and using nicotine patches, too, are considered as risky as smoking by many insurers. So, these habits can adversely affect not only your ability to get insurance coverage but also the amount charged for the same.

Did you know that smokers are charged higher premiums compared to their non-smoking counterparts? It's not just a matter of health; it's a matter of risk management for insurance providers. According to recent studies, smokers are statistically more likely to make claims related to critical illnesses, leading to a higher financial burden on families. Smokers are also more likely to have shorter life expectancies, leading to insurers attributing higher risks to them.

The financial ripple effect

As an advisory firm to families globally, we’ve witnessed firsthand how seemingly unrelated decisions impact one's overall financial portfolio. Quitting smoking is a good example of a decision that creates a positive financial ripple effect. When you stop smoking, not only do you save money on cigarettes, but you also position yourself for reduced insurance costs.

Consider this: A non-smoker may pay up to 50 per cent less for life and health insurance premiums compared to their smoking counterpart. These savings can add up significantly over the years, creating an opportunity to invest in wealth-building instruments or simply enjoy a higher disposable income, in addition to a healthier lifestyle.

In the UAE, where a progressive mindset towards health and wellness is gaining momentum, insurance providers are increasingly incentivising policyholders to adopt healthier lifestyles. Smoking is their prime target due to its direct correlation with a myriad of health issues, including heart disease, respiratory problems, and cancer.

Anselm Mendes is the Executive Director, Sales and Technology, The Continental Group