Wednesday 18 October 2017

Four ways you can slash costs by stubbing out cigs and cutting back on drink and calories

Don't throw away all the good work after Lent

So if you kicked smoking - or shed that extra weight, don't be tempted to backtrack now
So if you kicked smoking - or shed that extra weight, don't be tempted to backtrack now
Louise McBride

Louise McBride

Sticking to any good habits acquired while abstaining during Lent could save you tens of thousands of euro in insurance - and make it less likely for you to get turned away by an insurer.

So if you kicked smoking - or shed that extra weight, don't be tempted to backtrack now Easter Sunday is here. You'll be much better off financially - as well as medically - if you keep it up. There are some habits worth sticking to which will make you healthier and put more cash in your pocket. Here are four:

1. Stay off the fags

Smokers typically pay more for life, mortgage protection, serious illness, and income protection insurance - because of the health dangers linked to the habit.

A smoker in his twenties who is in good health could pay between 30pc and 50pc more for life insurance than a non-smoker of the same age and profile - however, a smoker in his 40s could pay twice as much as a non-smoker.

For example, a 45-year-old smoker was quoted €94.38 a month for a €300,000 term life assurance policy over 20 years - while a non-smoker of the same age and profile was quoted €45.18 a month, according to recent research by the life insurer, Royal London. The smoker's policy was therefore €590 a year - or almost €12,000 over 20 years - more expensive than that of the non-smoker. The same research found that a 45-year-old smoker could pay €12,250 more for mortgage protection life insurance over 25 years than their non-smoking counterpart.

Should you be a particularly heavy smoker, you could be charged more for your life cover than a lighter smoker. "With life insurance, Irish Life applies one set of smoker rates which covers all smokers of up to 30 cigarettes per day," said a spokeswoman for Irish Life. "However, for a smoking habit of above that, an additional charge would apply - on top of the basic smoker rates."

In some cases, smokers will struggle to get cover at all. "With serious illness insurance, someone who smokes more than 40 cigarettes a day may not be insurable," said John Geraghty, managing director of the online brokers LABrokers.ie. "Higher loadings can kick in earlier with serious illness insurance - with some serious illness insurers, normal smoker rates are charged if an individual smokes up to 20 cigarettes a day but after that, the loading can get higher."

You must usually have given up cigarettes for a year before your insurer will reclassify you as a non-smoker. Thereafter, your life insurance premiums should be much cheaper.

Remember, even the occasional cigarette or cigar is likely to push up the price of your insurance. Most insurers will consider you a smoker if you smoke a few times a year - even if you only smoke a cigar on those occasions.

2. Switch to e-cigarettes

Switching to e-cigarettes could slash your life insurance premium. "Some insurers are now considering e-cigarette smokers to be non-smokers and so don't load your premium at all if you smoke e-cigarettes," said Geraghty.

Aviva, Friends First and New Ireland don't charge e-cigarette smokers any more for life insurance than non-smokers - because neither of these insurers consider users of e-cigarettes to be smokers.

New Ireland's definition of a smoker is "a person who has smoked any form of tobacco in the last 12 months". Aviva doesn't consider those who use e-cigarettes to be smokers "as long as the individual has not smoked cigarettes, cigars or pipe tobacco in the previous year". Friends First defines a smoker as "a smoker of cigarettes or tobacco within the last 12 months".

Some insurers apply lighter loadings to users of e-cigarettes than to smokers of traditional cigarettes. Should you smoke e-cigarettes and have life insurance with Zurich, your loading is usually half that faced by a tobacco smoker.

Not all insurers look favourably on e-cigarette smokers so shop around for life cover if you have recently switched to e-cigarettes.

Irish Life for example defines a smoker as "somebody who has used tobacco or e-cigarettes in the past 12 months". "Irish Life currently considers e-cigarette users as smokers," said a spokeswoman for the company. "We are keeping this topic under review as the research in relation to e-cigarettes develops."

To be classed as a non-smoker with Royal London, you must not have used any tobacco products, e-cigarettes or nicotine replacement products (such as patches or chewing gum) in the last 12 months and also "have no intention to do so in the future".

As both Irish Life and Royal London consider e-cigarette users to be smokers, they charge e-cigarette users as much for life insurance as traditional cigarette smokers.

3. Lose weight

Should you be overweight, obese - or indeed underweight, this is likely to have implications for your health and increase your chances of making a life insurance claim.

Your premium could be loaded as a result. "More and more premiums are being loaded if someone's weight or height is out of kilter - because the person's health could be at risk," said Geraghty. "If a weight problem gets to a certain level, I've seen cases where people are uninsurable." Most insurers use Body Mass Index (BMI) measurements to determine if a customer is overweight. Your BMI tells you if you are the correct weight for your height. You are usually considered overweight if your BMI is more than 25; obese if it is over 30; and morbidly obese if over 40. Should your BMI be under 18, your insurance could also be loaded as your insurer may deem you underweight.

Let's say that you're a 30-year-old who does not smoke or drink. You want to buy a 20-year life insurance policy of €200,000. Should you have a BMI of 20, that policy could cost you €11.11 a month - but should your BMI be 35, the cost could be €16.66 a month, according to Nick McGowan, director of the online life insurance broker, lion.ie. Your higher BMI would therefore add an extra €1,332 to the cost of your policy over 20 years - though the additional cost could be even more if you have any health issues (such as heart disease or Type 2 Diabetes) or if your insurer takes a hard line on BMI.

"Some insurers are stricter on BMI than others and will automatically add a loading once BMI hits 30 so be careful which insurer you apply to," said McGowan. "If an individual is a smoker and has high blood pressure or raised cholesterol, this could trigger a loading at a BMI of 28."

Age and gender can also affect your chances of a loading, according to McGowan. "Insurers will tolerate a higher BMI for older applicants because they accept we gain a few pounds as we get older," said McGowan. "Insurers are least tolerant when it comes to obesity in young males because in this group, obesity is strongly associated with diabetes, heart disease and stroke. Therefore, a young male with a BMI of 30 will face a higher loading than an older female with a BMI of 30."

An insurer may refuse to quote you if your BMI is above a certain level - particularly if you have any other medical issues. Aviva, New Ireland and Zurich typically won't offer life cover to an individual with a BMI of more than 45. Friends First could turn you down for cover - or load your premium heavily - if you have a BMI of more than 40. Irish Life typically loads a life insurance premium if a BMI is between 32 and the early forties.

4. Stop problem drinking

Should you have a history of alcohol abuse, dependence or alcoholism, you will struggle to get life insurance. Even if you had an alcohol problem but no longer drink, you usually won't be covered until you've been off alcohol for at least a year - and your premium will also be heavily loaded for some time. With serious illness insurance, you may need to be off alcohol for three years before you're covered.

When you apply for life, mortgage protection or serious illness insurance, you will typically be asked how many units of alcohol you drink a week - and if you have been advised by your doctor to drink less alcohol.

The World Health Organisation (WHO) guidelines say that women should drink no more than 14 units of alcohol a week, while men should not drink more than 21 units a week. Should you drink much more than that, you could struggle to get life insurance.

"Consumption at or above twice these [WHO guideline] levels would be very unsafe," said a spokeswoman for Irish Life. "For the purpose of life insurance, we would look at the level of alcohol consumption and if any medical damage arose - or intervention was needed - as a result of excessive alcohol consumption."

Current Irish advice is that men should not drink more than 17 standard drinks a week, while women should not drink more than 11. It is worth finding out if your level of alcohol intake is dangerous for your health - because if it is, your drinking will be bad for your pocket too.

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