Philip Morris Launches Life Insurance Firm, Offers Discounts To Smokers Who Quit

Philip Morris International (PMI), the maker of Marlboro cigarettes, has established a life insurance company in the United Kingdom to sell life insurance to smokers -- but there’s a catch.

Philip Morris’ life insurance firm named Reviti offers discounts to smokers who quit smoking, or those that switch to an e-cigarette or a heated tobacco device such as iQOS made by PMI. PMI says Reviti will offer “highly competitive” premiums with incentives for quitting cigarettes or for giving up tobacco and nicotine entirely.

On average, people that switch to e-cigarettes will receive a 2.5 percent discount on premiums, said Reviti. On the other hand, people who switch to iQOS for three months will receive a 25 percent discount. People that quit smoking for at least a year will receive a 50 percent discount.

Premiums for a 20-year-old non-smoker come to $6.47 per month for a life insurance policy that pays $194,125. The same premium will buy a $77,650 policy for a 40-year-old non-smoker.

PMI said it will determine how big a discount to give people for using alternative products based on scientific data. Another factor to take into consideration will be the potential of a product to reduce a person’s risk.

PMI sells a number of cigarette alternatives, though it favors iQOS, a device that heats tobacco rather than burns it.

E-cigarettes are quite popular in the U.K. thanks to the country’s public health agency, Public Health England, favoring e-cigarettes and heated tobacco devices as a less harmful alternative to tobacco while encouraging people to switch.

Analysts said offering people bigger life insurance discounts for switching to iQOS might prod more people to try it.

PMI hopes to stop selling cigarettes altogether, said CEO Andre Calantzopoulos to CNBC in an interview.

“Obviously that makes sense for public health and the people who smoke themselves, but it also makes sense for our shareholders because financially, as these products are not cigarettes, they benefit from lower excise taxes and better margins, so it’s a win-win for everybody,” said Calantzopoulos.

“That’s why we all move in this direction, and the faster we move out of cigarettes the better for all of us.”