Big tobacco goes all in; Starting their own life insurance company

April 26, 2019

and offering discounts to people who vape! You might have heard of a little company called Philip Morris International, yes the very same tobacco company that sells Marlboro cigarettes, is getting into the life insurance business.

The companies name will be Reviti, the wholly owned subsidiary will initially sell life insurance in the United Kingdom with obvious plans to expand into more markets overseas, eyeing the US specifically. The schtick of this move into insurance? Smokers will receive discounts if they stop, quit, or switch to vaping eLiquids, saving even more if people switch to Philip Morris’ vaping devices.

They have certainly done the math on this one; people who switch to vaping will receive a 2.5% discount on premiums, and people who switch to Philip Morris’ heated tobacco product iQOS for at least three months will receive a 25% discount. Additionally those who quit smoking for at least a year will expect to receive a 50% discount.

Premiums for a 20 year old nonsmoker run about $6.47 (£5) per month for a life insurance policy that pays $194,125 (£150,000). The same premium would buy a $77,650 (£60,000) policy for a 40 year old nonsmoker.

Phillip Morris International said it determines how big of a discount to give people for using alternative products based on the scientific data along with the potential of a product to reduce a person’s risk. They already sell a number of cigarette alternatives, though they are clearly placing a much bigger bet on iQOS, which isn't exactly a vaping device but also still not a combustible, it heats tobacco rather than burning it.

Vaping is incredibly popular in the United Kingdom, thanks to the country’s public health agency embracing the fact that vaping is a less harmful alternative and encouraging people to switch. Offering people bigger life insurance discounts for switching to iQOS may push more people to try it, it's a bold and odd marketing strategy Cotton, we'll have to see if it pays off for them. 

Philip Morris International's CEO Andre Calantzopoulos said 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,” he said, continuing; “That’s why we all move in this direction, and the faster we move out of cigarettes the better for all of us.”

Whether you believe him or not Calantzopoulos also stated; "PMI hopes to stop selling cigarettes altogether." which is a bright and sunny rainbow filled future we all are aiming for; how bad governments and public perception impede us are the real obstacles to overcome here. 

What do you think about this? Is it a radical pivot for big tobacco's hungry shareholders to stay relevant in the game? Is it just a low risk high, visibility marketing play? 

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