You’re wrapping up a life insurance application with the tobacco-use questions. When you ask your client, John Doe, if he smokes, he responds, “No, I only use e-cigarettes.”

Did he just vaporize his chance for a preferred rate? Possibily.

(Related: Weed Users Avoid Smoker Penalties at 29% of U.S. Life Insurers) 

According to the Centers for Disease Control and Prevention (CDC) Office on Smoking and Health, e-cigarettes are essentially battery-operated vaporizers that produce a heated aerosol containing nicotine.

Some e-cigarettes look like cigarettes but the technology can also be built into cigars, pipes and pens, among other items. Users inhale the vapor — hence the term “vaping” — to get their nicotine fix.

Daily e-cigarette usage varies widely across the United States. In South Dakota, for example, only 0.61% the participants in the CDC’s Behavioral Risk Factor Surveillance System survey for 2016 reported daily e-cigarette usage. In one state in the Southwest, however, more than 2.7% of the survey participants admitted to using e-cigarettes every day.

The CDC cautions that, along with nicotine, e-cigarettes can deliver a concoction of other nasty substances, including:

  • Ultrafine particles that can be inhaled deep into the lungs.

  • Flavorings such as diacetyl, a chemical linked to a serious lung disease.

  • Volatile organic compounds.

  • Cancer-causing chemicals.

  • Nickel, tin, lead and other heavy metals.

One other risk: The CDC notes that “Defective e-cigarette batteries have caused fires and explosions, some of which have resulted in serious injuries. Most explosions happened when the e-cigarette batteries were being charged.” Ouch.

From an insurer’s perspective, e-cigarettes are not a harmless habit. That view is reflected in underwriting guidelines.

The smoking classification system at John Hancock Insurance, for example, has six categories.

To qualify for the top super-preferred nonsmoker rating, an applicant must report no tobacco or nicotine-use within the past five years, except for an occasional cigar — 12 or fewer per year — and the testing lab must find no nicotine in the applicant’s urine.

E-cigarette users are treated the same as regular cigarette smokers. Any e-cigarette usage within the most recent 12 months results in the applicant falling into one of the lowest two classes, preferred smoker or standard smoker.

E-cigarette use may also affect rates for products such as major medical insurance and critical illness insurance.

Some insurers are reportedly less stringent with e-cigarette users, however. Jack Venturi, the owner of BestLifeQuote.com, wrote in a blog post there that many e-cigarette smokers are turning to insurance companies that offer more affordable rates, and he singled out one large carrier for praise. That carrier “is one of the only companies on the market that will not give you smoker rates if you have not used cigarettes for at least a year, and instead use e-cigarettes,” Venturi writes.

That large carrier’s underwriting approach could save your client some premium dollars; unfortunately, it doesn’t do anything about those potential explosions.

Mardi Gras in New Orleans.

10. Louisiana 1.86%

Myrtle Beach Boardwalk (Photo: AP)

9. South Carolina 1.89%

A red barn in Jackson, Wyoming.

8. Wyoming: 2.0%

Graceland in Memphis. (Photo: AP)

7. Tennessee: 2.11%

Little Rock River Market District (Photo: AP)

6. Arkansas: 2.12%

Kentucky Derby at Churchill Downs. (Photo: AP)

5. Kentucky: 2.15%

Grand Canyon in Arizona. (Photo: AP)

4. Arizona: 2.25%

Mormon Temple in Salt Lake City. (Photo: AP)

3. Utah: 2.3%

Fremont Street in Las Vegas. (Photo: AP)

2. Nevada: 2.52%

A boat moves along the canal in the Bricktown area of Oklahoma City. (Photo: AP)

1. Oklahoma: 2.72%


—Read Life Insurance Challenges Posed by Marijuana and E-Cigarettes on ThinkAdvisor.


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