Ex-smokers quids in one year after smoking ban

26 June 2008
People who gave up smoking a year ago when the smoking ban was introduced could now cut their life and critical illness insurance premiums by up to 50%.

On 1 July 2007 a new law was introduced across England to make virtually all enclosed public places and workplaces smoke-free. The smoking ban was hailed by some organisations as having the potential to save thousands of lives.

In England, more than one in five (22%) of all adults smoke. But, for the 165,000 people who were prompted into giving up after last year’s ban, it might also have saved them thousands of pounds.

After a year of not smoking, life insurance companies start to class you as a non-smoker, which could result in a 50% reduction on life cover and critical illness premiums.

According to LifeSearch, the best deal currently on the market for a 35-year-old male smoker in good health would cost £15.51 a month from Norwich Union (for a £100,000 policy over 25-years). For a non-smoker, this premium reduces to £9.19 with cover from Royal Liver, a saving over the term of £1,896.

A female smoker would pay £12.82 with Norwich Union, or £7.50 with Royal Liver if she quit the habit – a saving of £1,596 over the 25-years.

For critical illness, a male non-smoker could save £7,881 over the term while a female non-smoker could save £4,779.

Michelle Slade, analyst at Moneyfacts.co.uk, says: "Due to the increased risks from smoking, most life assurance companies charge smokers over 50% more than they charge non-smokers. Anyone looking to take out life assurance now could make a large saving."

And people with existing policies could also benefit, as some companies will re-evaluate the original policy and charge the reduced non-smoker rate once the qualifying period has passed.

However, Slade adds some may insist on a new policy: “If this is the case, make sure that the increased premium for your higher age does not wipe out any saving you would gain for now being a non-smoker.”


Smokers who quit the habit a year ago are not just benefiting from cheaper insurance premiums. If they used the money they used to spend on cigarettes to pay into an ISA or savings account, or overpay on their mortgage, then they could also be quids in.

The average smoker puffs on 30 cigarettes a day. Assuming a packet of 20 costs £5.50, they could save £250 a month by giving up.

According to Moneyfacts, this time last year the top variable regular savings account had a headline rate of 7%. If an ex-smoker invested £250 a month into this account they would now have accumulated £3,108.

Alternatively, non-smokers could use their savings to pay off their mortgage.

Reza Attar-Zadeh, director of savings and investments at Abbey, says its mortgage customers could knock eight years off the term of their loan by overpaying by an extra £5 a day - saving over £50,000 over 25 years.

"It goes without saying that giving up smoking is not only great for your health but also for your bank balance. Using the saving wisely could knock years off your mortgage," Attar-Zedeh adds.

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