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Issue 51 - July 2007
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With the introduction of the smoking ban this weekend the government predicts 600,000 people will give up smoking all together. Nestled amongst the myriad of benefits to giving up and currently ranking no 2 on the list of reasons to quit, are the financial benefits. But, how do you turn a bad habit in to a small fortune?
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On 1st July, England finally joined Scotland, Wales and Ireland in banning smoking in enclosed public places and work places.
It is estimated that some 10 million people in the UK smoke cigarettes and a further 2 million smoke other tobacco products such as cigars and pipes. The treasury earned an astonishing £8bn in revenue |
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the sale of tobacco products in 2004/5.
Ever heard the saying "everything in life is give and take"? With 80% of the cost of a packet of cigarettes going directly in tax to the treasury and your ever diminishing ability to run for the bus every morning, it may have already dawned on you that your relationship with those little white sticks has become a decidedly one-sided affair.
It is strikingly obvious to most that if you were to stop spending £4.50 per packet, five times a week your bank balance will start to look as radiant as your smoke-free skin & hair. With the average smoker consuming 14 cigarettes per day the annual spend is approximately £1,220.
So, having made the decision to quit, what to do with your new found wealth?
You might be tempted to take on the membership to that expensive golf club you've always admired from afar, or maybe start teaming Jimmy Choo's with absolutely everything in your wardrobe. There is a better answer.
By following some simple steps you could invest your new found spare cash and turn your bad habit into a small fortune. Here's our straightforward four point action plan:
- The hard part, take the decision to stop smoking
- Invest the £1,220 you were spending on smoking in
to a National Savings Mini Cash ISA
- Once you have been smoke free for 12 months apply for new life insurance or critical illness cover at substantially reduced rates and you
can use the savings to add to the monthly contribution into your Mini Cash ISA
- At the end of 20 years, collect your small fortune
Of course, if you gave up some time ago and have already been smoke free for over 12 months now is an ideal opportunity to reappraise your insurances as most insurance providers will now classify you as a non-smoker. You could make some serious savings immediately, bringing that windfall ever closer so check with your insurer now to see if they will reduce your premiums or alternatively arrange for a quotation for a new policy at non-smoker rates. Here at Moneynet we compare prices across the market to find you the best price whatever your circumstances.
Richard Brown CEO of Moneynet explains;
"It has been estimated that 364,000 patients are admitted to NHS hospitals every year with smoking related illnesses such as lung cancer and heart disease and therefore the chances of the insurance provider paying out on death or diagnosis of a critical illness are significantly increased compared to a non-smoker. For that reason it's worth reviewing your life insurance premiums if you've given up providing your health is otherwise unchanged. Most people find that they can make substantial savings on their premiums as non-smokers"
Here are some examples of the difference in insurance premiums between a smoker and a non-smoker:
| Life Insurance Guaranteed Premiums £100k level term cover over 20 years - cheapest |
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Aged 30 |
Aged 40 |
Aged 50 |
Aged 60 |
| Male Smoker |
Friends Provident £10.39 |
Legal & General £22.80 |
Aegon Scot Equit £64.98 |
Norwich Union £191.30 |
| Male Non Smoker |
Friends Prov £6.86 |
L & G £12.20 |
L & G £30.20 |
Norwich Union £93.70 |
| Female Smoker |
L & G £8.40 |
Aegon Scot Equit £18.30 |
L & G £49.10 |
Aegon Scot Equit £138.70 |
| Female Non Smoker |
Friends Prov £5.81 |
Friends Prov £9.93 |
L & G £22.50 |
Norwich Union £68.40 |
You can see from the figures above that for older smokers the argument for giving up becomes even more compelling with a 50 year old smoker paying over £8000 more for life insurance over the term of the policy.
In fact, we estimate that older smokers with a 20 a day habit could save more than £80,000 over 20 years if they were to invest the money saved on their cigarettes as well as their reduced insurance premiums. So, give up and you could find yourself quid's in and bursting with life. And let's face it; the cost of buying cigarettes is never going to decrease.
Giving up smoking is not easy, but there is now plenty of support available to help you to quit. You may want to discuss your options with your pharmacist, G.P. or visit the NHS Go Smoke Free web site at http://www.gosmokefree.co.uk/
So, whilst some may see the new smoking ban as reducing their enjoyment in life, the savvy soon to be ex-smokers will be looking forward to a long, healthy and wealthy life!
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2 great reasons to review your live cover today.
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Moneynet is a trading name of Sterling Business Consultants Limited of Sussex House, 8-10 Homesdale Road, Bromley, BR2 9LZ. Registered office is 51 Eastcheap, London EC3M 1JP, Reg No: 03165711. Moneynet is authorised & regulated by the Financial Services Authority. This site is intended for UK residents only. Information correct at time of publication.
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