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Life Insurance Havens

Life Insurance Havens Cigar smokers can still get affordable coverage—even when they own up to their passion
Michael Moretti
From the Print Edition:
Michael Jordan, July/August 2005

Questions, background checks, examinations, hot lamps, intrigue, evasion. For some cigar smokers, a life insurance application review can seem like a CIA interrogation. But as it turns out, honesty may be the best policy.

"They know everything already or will find out," the owner of a telecommunications business says about the ominous intelligence of insurance companies, which is why he was honest with his life insurance company. But it worked out. He came clean on his one-to-three-cigar-per-week routine and still received the best rate on his coverage.

A 38-year-old who is married with two children, the business owner needs to have a good policy, but not at the expense of a good life. "Cigars as a lifestyle are acceptable provided you do other things to offset it," says the businessman, who in addition to being an avid cigar smoker regularly runs and works out. He says this existence led to a favorable rating from Mass Mutual. His annual premium is well below that of what a cigarette smoker would pay.

An official at Mass Mutual, however, expressed surprise that the business owner would have been given a nonsmoker rate, given the frequency of his cigar smoking. Approval of such a policy "clearly does not line up with our underwriting practice," says vice president and chief underwriter Robert Haran.

According to the Consumer Federation of America, the average smoker rate on life insurance is twice as high as that of a nonsmoker. With those numbers, some cigar smokers are tempted to stretch the truth, and do. But lying may be unnecessary. The insurance classification of "smoker" does not always mean "cigar smoker," and just because you smoke cigars doesn't automatically mean you'll get the highest possible rates.

"Anyone who is paying cigarette smoker rates because they use a cigar, pipe or chewing tobacco is paying too much... They can save a fortune," says Byron Udell, owner and chief executive officer of Accuquote, a personalized online insurance consulting company. Udell says that the savings are out there, but people do not always research the alternatives.

Udell, a self-proclaimed insurance aficionado, has been in the insurance business for 18 years and sees a niche market in cigar smokers looking for ample savings on premiums without the burden and potential pitfalls of perjury.

Cross-referencing his company database of hundreds of life insurance providers, Udell says the lowest rate on a 45-year-old smoker's $500,000 20-year life insurance policy is $2,730 per year, while the low for nonsmokers, who don't use tobacco at all, is $770. According to Accuquote's database, if you are a cigar smoker (and don't smoke cigarettes), you could be paying only $770 a year, provided you're smoking at a rate of about one cigar a month. A "heavy cigar smoker" would pay approximately $1,085 per year—still much cheaper than that of a cigarette smoker, yet more than a once-a-month smoker. Of course, factors such as age, lifestyle and medical history also play a huge part in insurance pricing.

Wayne Lesser, a 60-year-old attorney from San Francisco, says he was able to obtain a favorable rate on a policy from U.S. Financial Life Insurance Co. despite admitting that he smoked cigars. "In the universe of insurance companies, there is not a set market for guys like me that smoke cigars," says Lesser. "You find that cigarette and cigar smokers are lumped in the same [category]." Looking for insurance about four years ago, Lesser saw a plan advertised in a magazine with nonsmoker rates for cigar smokers, so he signed up. However, two years later when he decided to amend his plan, those rates were no longer available and the broker he spoke with was baffled by those initial rates.

We put the question to our Cigar Aficionado Online forum members, many of whom have had mixed experiences with insurers. "They told me that if I sign an affidavit that I had completely quit cigars, and had for two years, only then would they give me nonsmoker rates," said stapletonj. "I lied and said I didn't smoke," said jacket88. "In fact, I lied about a ton of things on that application." "I have American Income Life," said prccaptain, "and they told me cigar smoking doesn't count." (Respondents were referenced by their online user names to protect their identities.)

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