Former smokers could be paying hundreds of pounds too much for life insurance if they've failed to tell their provider they've kicked the habit.

An average smoker's annual life insurance premium is £209.76 compared with £113.88 for non-smoker's, according to research.

That's a difference of £95.88 which, over the years, can add up to significant sums (see the Life Insurance guide).

The research by Sainsbury's Finance estimates ex-smokers are unnecessarily paying £316 million a year too much by not telling their insurer, though not all quitters will see costs fall.

Findings reveal around 6.5 million life insurance policy holders gave up smoking more than 12 months ago and haven't used nicotine replacement products over the past year so could be classified as non-smokers by a life insurance firm.

Yet 51% of its sample who've quit had not informed their provider.

Andrew Gray, from Sainsbury's, says: "The health benefits of not smoking are now well-known but the financial gains are often underestimated. 

"Apart from the obvious savings you can make from not buying cigarettes, your life insurance premium could decrease as you are demonstrating you've made efforts towards living a healthier lifestyle."

Quit smoking? What to do

Non-smokers pay a lot less than smokers because they're a lot less likely to die during the term of the policy.

To count as a non-smoker you need to have been genuinely smoke-free for at least a year.

So tell your insurer so it can re-calculate. However, there is no guarantee your premium will drop.

The Association of British Insurers (ABI) explains that an insurer may consider the damage has already been done if someone who has smoked for 30 years gives up, for example.

That said, it says there is unlikely to be any disadvantage to telling your insurer. As long as you filled out your original application form correctly and you've not had any other change of circumstance, your premium shouldn't rise, the ABI adds.

Further reading / key links

Cost cutting: Life Insurance