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May 16, 2019

Life insurance for smokers, by smokers

By GlobalData Financial

Due to the detrimental side effects of smoking tobacco, life insurance premiums are considerably higher for smokers. Reviti offers discounts for smokers who decide to quit – but the provider has come under scrutiny.

According to MoneySuperMarket research, smoking increases life insurance premiums by an average of 54%. This has the effect of adding £152.76 per year to an average life insurance policy. According to Cancer Research UK, smoking is the biggest cause of cancer in the world, and the NHS estimates that 16% of all deaths in the UK can be attributed to smoking. This suggests the higher premiums are not unjustified.

In order to encourage smokers to quit, Reviti offers customers discounts for kicking the habit. Those who stop smoking altogether will receive a 50% discount on their life insurance premium after 12 months. Customers who switch to e-cigarettes can receive a 2.5% discount, while those who switch to a “science-backed smoke-free alternative” can receive a 25% discount.

On paper this offer is promising. It is often extremely difficult for smokers to quit cold turkey, and insurance companies do not usually differentiate between traditional cigarettes and e-cigarettes. However, this is also where Reviti is generating controversy. Currently, the only science-based smoke-free alternative that qualifies for a 25% discount on premiums is the IQOS heated tobacco product. IQOS is manufactured by Phillip Morris International (PMI), the largest tobacco company in the world – and Reviti is part of PMI.

Offering premium discounts for individuals who quit smoking is a win-win for both parties. Customers benefit from a healthier life while insurers reduce the risk they carry. But a tobacco company selling smokers life insurance will undoubtedly be viewed in the wrong way, especially when it offers a larger discount to those who use its own-brand products.

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