Financial reasons to quit smoking on World No Tobacco DayGiving up tobacco could save you £100s

31 May 2011


You can get cheaper life insurance, health cover and critical illness protection by giving up smoking

Today (Tuesday 31 May) is World No Tobacco Day, organised by the World Health Organisation (WHO). As well as the obvious health benefits, we round up financial reasons to give up smoking.

According to the NHS Information Centre, around £16 billion was spent on tobacco in 2009. 21% of UK adults are thought to smoke, with an average 13 cigarettes smoked each day.

At £6 a packet, that’s around £1,400 a year that could be saved. Plus, over the course of a year, this money could earn around £34 in interest if paid into, say, a Norwich & Peterborough regular-saver savings account paying 4%. Alternatively, you could save around £150 in interest if you use the money to reduce the balance each month on an average credit card charging 18% APR.

Life insurance for smokers

Life insurance can cost much more for smokers. For example, a 10-year level-term policy insuring a 45-year-old man for £200,000 of cover would cost £21.28 per month for a non-smoker with Sainsbury’s Bank, but £42.99 for a smoker. That’s an extra £2,605 over the 10-year term for a smoker.

Other protection insurance policies

Any protection insurance policy where the premium is based on your health or lifestyle is likely to cost more for smokers. Income protection, critical illness insurance and private medical insurance will all cost extra if you’re a smoker as you’re more likely to fall ill and therefore make a claim on the policy.

Is there a positive financial side to smoking?

One financial product that gives a better monthly payout to smokers is an annuity when you retire. For example, a male smoker buying an annuity at 65 with a pension pot of £100,000 could expect to receive around £7,716 each year, compared with a non-smoker, who would get up to £6,588.

However, this is only because smokers have a below-average life expectancy, so annuity providers will have to pay out for a shorter period.

If you are a smoker and approaching retirement, it’s worth taking independent financial advice to see if you could get an enhanced life annuity. A good adviser can guide you as to how to get a better deal on your protection insurance needs, too. 

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