Consumer Insurance Blog

Tomorrow is the American Cancer Society's 35th Annual Great American Smokeout, a good day to quit smoking if you haven't already, or to support the smokers that you know in kicking their habit. Quitting smoking is not only a good decision with respect to your physical health, it can also be quite a boon to your financial health. Even beyond the cost of cigarettes themselves, smoking carries other high costs. Most life insurance, health insurance, homeowners insurance and even auto insurance policies carry higher premiums for smokers. It stands to reason: the price of insurance is based on the odds of having to make payment on a claim. Smokers are an overall riskier bet than nonsmokers. For life and heath insurance, the risks are obvious and well-documented: on average, smokers have significantly more health problems and die younger.

Property insurance is also more costly for smokers due to a higher risk of smoking-related accidents. Households with smokers have an increased risk of fires. According to the US Fire Administration, "... an estimated 9,000 smoking-related fires in residential buildings occur annually in the United States, resulting in an estimated average of 450 deaths, 1,025 injuries, and $303 million in property loss ...they are the leading cause of fire deaths, accounting for 17 percent of fire deaths in residential buildings." Smoking is also considered to be one of the major "distracted driving" culprits leading to an increase in auto accidents. And with any property, residual damage from smoke can decrease the property value and make resale more difficult. There may be other costs too: last year, it was revealed that Apple voided computer warranties due to second-hand smoke.

Save your health and save money in the process - that's a win-win all around!

Stop smoking resources
American Cancer Society: Great American Smokeout Guide to Quitting Smoking
American Cancer Society: Great American Smokeout Resources and Tools
American Cancer Society: Helping a smoker quite: do's and don'ts
American Lung Association - Help resources for quitting smoking
Centers for Disease Control: Smoking & tobacco tools and resources
Mayo Clinic 10 ways to help teens stay smoke-free
Teen's Health: How can I quit smoking?

Given that it's Life Insurance Awareness Month, we thought we might offer a few tools for you to assess your risk of imminent mortality. We've mixed the serious with the silly to lighten things up a bit.

Death Risk Rankings is an interactive tool from CarnegieMellon that calculates your risk of dying in the next year and allows you to compare that risk to others in the world.

Cardiovascular Risk Calculator - estimate your chance of a cardiac event, dying from heart disease, and your overall chance of dying in the next 10 years.

Dead at your age - enter your birthday and find out what celebrities and famous people you have outlived.

Are you likely to die of a shark attack? Compare the relative risk of shark attacks to humans to various other risks.

Life Expectancy Table - find your age and your sex to learn the additional number of years you may expect to live. A footnote says that one-half of individuals can expect to live beyond their life expectancy and one-half will not live to that age.

The Death Clock bills itself as "the Internet's friendly reminder that life is slipping away... second by second." Enter your date of birth, sex, bmi and smoking status. You can choose to your results on a scale ranging from "sadistic" to "optimistic" - or just plain "normal."

Do you have family members who depend on your income? The National Association of Insurance Commissioners (NAIC) tells us that September is "Life Insurance Awareness Month" and reminds us that lifestyle choices and factors can have an impact on the availability and cost of insurance coverage. "The cost of an individual health or life insurance policy takes into account your age, height, weight, medical history, occupation, driving record, your family health history and other personal habits like smoking." Insurance companies also take high risk activities such as mountain climbing, horseback riding, motorcycle riding, flying, or hang-gliding into consideration.

NAIC provides an overview of the information an insurance company will typically request on a life or health insurance application, along with an overview of the underwriting process and some tips on what you should do if you are denied coverage. Also see NAIC's Life Insurance Buyer's Guide (PDF).

Additional information:
Buying Life Insurance and Annuities in Massachusetts - from the MA Office of Consumer Affairs
Life Insurance - info from the CT Insurance Department
Annuities and Life Insurance - from the NH Insurance Department
The Facts of Life and Annuities (PDF) - from LIMRA International, Inc. (Life Insurance and Market Research Association)

As you gather your year-end documents for tax preparation, there is one important financial item that should be included: checking your insurance policies and other important financial records and plans to ensure that your designated beneficiaries are up to date. It's a good idea to review beneficiaries annually because life events may have changed your situation. Parents die, marriages dissolve, children are born, and any of these events may warrant a change in beneficiaries. Failing to periodically update your beneficiaries could have unintended consequences – you might not want a former spouse rather than your current spouse to be the beneficiary of your assets but that could happen!

Here are some best practices when naming beneficiaries:
Always name a beneficiary. People who have wills often think they have their beneficiaries covered, but this assumption can be wrong. Generally, beneficiaries named in insurance policies and retirement plans will take precedence over any instructions you leave in your will. Make sure you have specified individuals as beneficiaries in your policies and plans. People often name their "estate" as the beneficiary but this can lead to benefits being tied up in probate court. Failure to name a beneficiary may also mean that you miss out on certain plan or policy advantages. For example, if you name an estate as beneficiary, an IRA will be liquidated on your death and taxes will be due. If your spouse is named as beneficiary, he or she could potentially continue to enjoy tax-free growth.

Be specific. Avoid ambiguous language. Simply stating “my husband” or “my niece” may not be sufficient, particularly in instances of multiple marriages. It's a good idea to use full names of intended beneficiaries to avoid potential confusion or disputes.

Name a secondary beneficiary. Make sure that it will be you and not your state law that determines who will be the recipient of your policy benefits. If your primary beneficiary should pass away and you have not named a secondary or contingent beneficiary, your insurance policy or retirement plan will be distributed according to your will. If you have no will, the decision will default to state law.

Keep important records in a secure place and tell a trusted family member what and where they are. Many people die suddenly without leaving instructions as to where a will, insurance papers and other important records are kept. All too often, benefits go unclaimed because family members don't know about potential benefits or can't find important account information. Bank accounts and insurance policies are overlooked. Make sure someone in your family is familiar with your most important records and where they are kept.

Further reading:
Are your beneficiaries up to date?
Update your beneficiaries
Life Insurance: Reviewing Your Policy Important to Securing Your Family's Future
Insurance Beneficiaries