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Beware nicotine gum's effect on premiums, IFAs warn

Beware nicotine gum's effect on premiums, IFAs warn
Photo: Irina Iriser via Pexels

Financial advisers have warned of the consequences of using nicotine gum after some clients were penalised with 'smokers' premiums'.

Wolverhampton-based Julian Pruggmayer, principal of Financial Risk Management, raised the alarm when one of his clients - who has not smoked a cigarette in five years - did not pass a life insurance nicotine test. 

Some insurers require Lints as part of a medical exam to underwrite the individual. On this occasion, the client was told their insurance cover would be more expensive to reflect the lower life expectancy relating to smoking-related diseases and conditions.

According to Pruggmayer, the client had not smoked in nearly five years and had not vaped, although he had, on very rare occasions, chewed nicotine gum. 

The tests are so sensitive they picked up the trace elements of nicotine from the chewing gum.

Pruggmayer, who also said his client lives a very healthy lifestyle and exercises regularly, said: "I think the public is being misled. The insurance industry prides itself on smoker and non-smoker rates.

"This chewing gum is purchased by people to help them give up smoking, only to then have their noses rubbed in it by this industry saying sorry gum is the same as lighting up 60 tabs a day."

Kevin Paterson, managing director of insurance broker Enduralife, said some insurers do try to price insurance based on a distinction between smoking and vaping, or price it based on how long ago someone gave up smoking, the majority still underwrite any nicotine presence as a risk.

He said: "The insurers we use typically operate in the same way and the rationale behind this is often driven by an ex-smokers propensity to smoke again if they are vaping or using a nicotine substitute, irrespective of how long they have effectively given up.

"Some insurers do make the distinction between smoking and vaping and will price accordingly, and some will also ask how long ago someone gave up smoking and will price that in accordingly."

Cost of smoking and effect on premiums

Their warnings coincided with Royal London's publication of a study which showed quitting smoking could save people up to £16,000 in insurance premiums over the course of their cover.

It said: "Smokers who kicked the habit could be eligible for lower rate premiums if they have not smoked tobacco or used any nicotine products in the last 12 months."

Table: Example of premium differences between smoker and non-smoker rates

AgeTerm (years)Monthly premium non-smokerMonthly premium smoker

Savings over 25 year term for non-smoker

3025£7.17£13.13£1,788
4025£13.36£31.38£5,406
5025£29.13£82.48£16,005

Premiums are based on level single life cover, over a 25 year term for £150,000 sum assured. Source: Royal London.

Craig Paterson, chief underwriter for Royal London, said: "While the new year is a popular time for many to give up smoking, No Smoking Day is a perfect opportunity for those who didn’t quite manage to kick the habit.