Tag Archives: Insurance knowledge

Smokers Pay More For Their Life Insurance.

Everyone knows it, right? Smokers pay more money for their life insurance.  Does it really make that much of a difference? Of course it does. The likelihood of dying makes life insurance a pretty bad risk – and that likelihood is pretty high.  According to the CDC, Cigarette smoking is responsible for more than 480,000 deaths per year in the United States, including nearly 42,000 deaths resulting from secondhand smoke exposure. This is about one in five deaths annually, or 1,300 deaths every day. On average, smokers die 10 years earlier than nonsmokers. Those are pretty bad odds for an insurance company, thus the increased cost of life insurance. We’ll get to that in a bit, though.

This isn't the best way to quit.
This isn’t the best way to quit.

According to the American Cancer Society, about 40 million Americans still smoke cigarettes. Using tobacco is the largest cause of preventable premature death in the world – while the use of cigarettes has dropped (from 42% in 1965 to 16.8% in 2014), there are plenty of other ways to take in tobacco, and all are more dangerous than NOT taking in tobacco.

Quitting smoking has many benefits but can be hard. Research shows that using support groups and counseling can greatly improve your chances of quitting – and surprisingly that going cold turkey actually increases the “stickiness” of the quit. Most smokers quit several times for varying lengths of time before they actually cease all use, but according to healthcommunities.com, cold turkey seems to be the most successful method,

“ In a 2007 study published in Nicotine and Tobacco Research, researchers interviewed more than 8,000 adult smokers from four countries attempting to quit the cigarette habit. Participants were contacted at three separate intervals to see how their quitting methods had worked out. The researchers then compared success rates of smokers who were trying the cold turkey approach with those who were employing other methods.

The study found that 68.5 percent of the smokers made an attempt to quit using the cold turkey method, and of those, 22 percent succeeded after the second contact with researchers and 27 percent succeeded after the third contact. Among people using the cut down method, in which a person smokes successively fewer cigarettes before abstaining completely, only 12 percent and 16 percent, respectively, were successful.”

We human beings are snowflakes though, and cold turkey may not work for you – so try one of the many other cessation methods out there because it will do more than lower your life insurance rates; it will save you money, time, and give you many more years with your families.

So what does this have to do with Life Insurance? A smoker can pay substantially more premium for their policy than a non-smoker. Here is an example: a 40 year old male who is healthy and does not smoke can qualify for the best ratings Life Insurance companies have to offer. A  40 year old smoker can only qualify for a higher smokers rate. For example a $100,000 20 year term policy for the non-smoker is around $130.00 annually. However a 40 year old male smoker will pay around $271.00 annually for the same policy. That’s more than double the premium for the smoker. Over 20 years this adds up to $2,820.00 in additional premium that the smoker will have to pay for the same coverage. The bottom line is it pays not to smoke.

Here are some resources to help you stop smoking.

https://smokefree.gov/

http://www.cancer.org/healthy/stayawayfromtobacco/guidetoquittingsmoking/

https://quitday.org/quit-smoking/

 

 

Sources

http://www.healthcommunities.com/quit-smoking/quit-smoking-cold-turkey_bht.shtml

http://www.cdc.gov/tobacco/data_statistics/fact_sheets/fast_facts/

 

What is Liability Insurance?

Sure, most of us buy insurance to protect our stuff. Obviously, you must have nice stuff to protect  – why else would you be reading a blog about insurance? Yes, a big part of what we sell is property insurance, but what about the other part of insurance  – the one that protects you above and beyond the specific dollar value of one piece of property That, dear reader, is called “liability insurance”.  Most personal policies that you pay for already have liability insurance, so isince you are already paying for it, you may as well understand how it works.

Generally, the largest amount of liability coverage most people have is attached to their home insurance policy. In our agency, we generally try to steer our clients to buy the most liability insurance that they can on their home; not because it raises the premium, but for the amount of value per dollar spent. The difference in premium between the minimum liability amount of $100,000 and $500,000 is generally in the range of $100 a year. This is an incredible way to invest your insurance dollars – where else can you buy $400,000 extra worth of anything for $100? Nowhere but insurance.

Liability coverage, at its core, protects you from lawsuits that may be filed against you. Yes, if your negligence causes injury like if the tile you keep meaning to fix finally breaks and your neighbor breaks his leg. However, the big value in liability insurance is in your legal defense. Talk trash about your neighbor and get sued? Liability coverage to the rescue. The standard amount of liability insurance on most policies is $100,000, but if you have priced a lawyer lately, you understand how much more coverage you really need. It’s the cheapest part of your home insurance, pound for pound, so you should bump it has high as you can. You never know when you will need it – or exactly how much trash your wife talks about the neighbors.

Auto liability is the liability coverage most people are familiar with – and like home insurance, it really shouldn’t be skimped on. Auto liability coverage is generally divided into three numbers – ex. 100/300/50. These three numbers represent $100,000 bodily injury per person/ $300,000 bodily injury per accident/ and $50,000 in property damage to others per accident. State generally set a minimum amount of coverage that is acceptable; in Texas it’s 30/60/25. Should you ever “rock the minimum”? No, for two main reasons.

1. It’s too low. If you are in a major accident and are left short, the damages you cause still have to be paid. If you total one Mercedes, or even a brand new Ford F150, you will come up well short on property damage. That money still needs to be paid. Guess who is responsible?

2. Higher limits of liability can actually save you money in the long run. Even if you are never in an accident, carrying high liability limits shows insurance companies that you are a concerned driver. One of our main functions here at The Phoenix Insurance is to shop your insurance for you when (not if, but when) your insurance premiums go up. It’s easier to get a better deal if you carry higher liability limits. Insurance companies like to insure responsible drivers, and nothing says “responsible” to an insurance company like high auto liability limits.

Remember up there where I said that home insurance is “generally” where people carry most of their liability insurance? I said generally because some (sadly not all) people carry an excess liability or “umbrella” policy. An Umbrella policy generally covers you for $1 million in excess of the liability coverage on your home and auto insurance. If you have been picking up what I have been laying down in the rest of this blog, you are starting to realize that higher liability limits are always better. With higher limits your assets are better protected. Yes, I said assets. While liability insurance does not specifically cover a specific piece of property for a certain value, it is there to prevent you from having to sell that piece of property off in order to defend yourself in court. You are already paying for liability insurance. Is it enough? An umbrella policy on top of whatever you have is generally cheap – usually under $300. Isn’t your peace of mind worth at least that much? Even if you choose not to get an umbrella policy, make sure you carry high enough limits on both your home and auto insurance at least. Call one of our agents today and continue the discussion about liability coverage.

auto insurance