Some good news if you can’t quit smoking; your addiction to nicotine will actually benefit you if you are buying an annuity. This is because insurers pay higher annuity rates to smokers because they have a shorter life expectancy than non-smokers. When it comes to annuities, insurers will class you as a smoker if you have smoked at least 10 cigarettes a day for 10 years.

If you smoke 10 or more cigarettes a day, suffer from diabetes or a terminal illness, you could be entitled to add as much as one-third to your annuity by buying an enhanced annuity.

People are often reticent about admitting to smoking when they are buying an annuity, thinking that it will count against them. But in fact, the effect is the exact opposite of when you are buying life assurance, so smokers should be sure to declare their habit to their financial adviser.

Take Mr. W, from Wales. He has given up smoking for almost a year and is currently shopping around for life insurance. He says: “I started smoking when I was really young, about 11 or 12, and although I gave up about five years ago a few personal issues meant I ended up starting smoking again. But when the ban came into effect last summer it got harder to smoke in a lot of places such as the pub so I decided to give up again. I also wanted to get more healthy.”

“Last year when I was looking for life insurance and critical illness cover it was too expensive for me, about £60 a month,” he says. “But because I’ll be classed as a non-smoker when I haven’t smoked for a year I’ve started looking round again.” He found cover for £35 a month.

Then we have Mr. V, again from Wales, aged 62, and a smoker. He got an annuity quote without giving details about smoking, and was quoted £5202 per year. A friend suggested he disclosed his habit. He did, and was quoted £5814 per year. Now he can afford the cigarettes, or perhaps he should now give up smoking.

This entry was posted on Saturday, July 19th, 2008 at 11:06 am and is filed under Annuity rates, General, Ill health, Smokers, enhanced annuity. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.