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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

(continued from page 1)

According to a Cigar Aficionado Online poll of cigar smokers last year, 33 percent said they have lied or stretched the truth to life insurers, while 44 percent said they have not. The other 23 percent did not respond, or did not own a life insurance policy.

Robert Flood of Allen J. Flood Insurance Companies Inc., a property, casualty, life, accident and health insurance agency based in Larchmont, New York, said that companies provide insurance to cigar smokers and other tobacco users under a nonsmoker rate because doing so can be mutually beneficial to the company and the client. "It's an aggressive stance by the company saying, 'We think we can write enough policies and generate enough premium that we can accept the increase in our claims payments as a result of cigar smoking.' "

It is not only the larger insurance companies that can take on the potential additional financial burden. "Allowing cigar smokers under a nonsmoker rate could make sense for a smaller company in order to grab a greater percentage of the market share," says Flood. The same could also be true of a larger company.

"It has become a more important niche in the market," agrees Mark Sahagian, a regional brokerage director for Prudential Financial, who is based in Gurnee, Illinois. "More people are smoking cigars, and better cigars. [Our policies] allow cigar smokers to be honest about their cigar smoking."

According to Sahagian, Prudential offers five different plans, grouping nonsmokers and smokers according to their degree of tobacco use. To obtain the least expensive rates overall, you need to be in excellent health, have an unblemished family medical history and a tame lifestyle, and have steered clear of all tobacco for five years. (Sahagian estimates that those earning Prudential's best rating account for only 20 percent of its applicants.) Most cigar smokers fall under the insurer's second- and third-level plans and are considered "nonsmokers"— people who have smoked cigars but not cigarettes for at least the past 12 months. Differentiating between these two groups depends on the frequency of smoking, as well as a whole list of other factors, including blood pressure, family medical history, personal medical history, occupation, residence, etc. Cigarette smokers go directly into the two "smoker" categories and are subject to the same additional factors.

The bottom line is that reasonable insurance rates are available to cigar smokers "If someone is a 'celebratory smoker' [someone who smokes cigars on special occasions]—smoking ten to twelve cigars a year—they would get the Preferred Plus Plan, the second degree of coverage behind the highest," says Sahagian. More frequent cigar smokers would likely be placed in the company's third-tier plan.

Mass Mutual also offers a favorable life insurance plan for people who smoke more than one cigar a month. Applicants can qualify for the insurer's nonsmoker rate as long as they don't smoke more than 24 cigars a year, and test negative for nicotine, according to Haran. He said the company had previously limited smokers to 12 a year, but changed the policy several years ago because "we didn't feel there was any extra mortality."

State Farm Insurance, one of the largest life insurance providers in the United States, has more stringent guidelines when defining smokers and nonsmokers, a policy that is more typical in the current market. State Farm, according to spokeswoman Ana Compain-Romero, draws the line at one cigar per month to be eligible for a nonsmoker rate. Any more than that, and an applicant would most likely be lumped in with cigarette smokers and subject to a higher rate than nonsmokers.

Northwestern Mutual Life Insurance Co., the largest provider of individual life insurance in the United States, used to be more cigar-friendly, but now shares a policy similar to State Farm's. "We still make an exception for cigar smokers," says Kurt Carbon, a spokesman for Northwestern Mutual. "Those that smoke 12 or fewer cigars per year are still eligible to get nonsmoker policy rates; 13 or more get smoker rates."

According to a 1995 article in Cigar Aficionado, about 11 cigar-friendly life insurance providers offered non-cigarette-smoker rates to regular cigar smokers. Today, that list has been cut in half. State Farm, Northwestern Mutual, Metropolitan Life Insurance Co., Mutual of Omaha and Guardian Life Insurance Co., which were all mentioned in the 1995 article, no longer make the distinction, which now means it's tougher for cigar smokers to obtain nonsmoker rates.

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