Tobacco Firm Philip Morris Joins Life Insurance Market With New Subsidiary

Philip Morris International
A woman smokes a cigarette in front of small British flags at Dagenham Sunday Market in Dagenham, east London (Photo: Reuters)

The tobacco company Philip Morris International, which sells the iconic Marlboro brand of cigarettes, is apparently now getting into the insurance game with the launch of its new subsidiary Reviti. The wholly-owned subsidiary is a life insurance company that will initially be selling mainly in the UK. However, Philip Morris plans to expand into the international markets very soon.

As an added incentive to its current customers, Reviti will be providing discounts to smokers who have recently quit or have transitioned to the company's debatably less harmful vaping and heat-not-burn tobacco products.  According to the company, those who have quit or have switched to their electrically-heated smoking tobacco products will receive a massive discount.

Customers who have switched to vaporizers or vapes will receive a 2.5 percent discount on premiums. Meanwhile, those how have switched to the company's iQOS tobacco heating products will receive a significantly larger 25 percent discount. The largest discount being offered however is for former smokers who have completely quit the habit. These customers will receive a 50 percent discount on premiums. As an example, a 20-year old non-smoker can get a life insurance plan with coverage of US$194,125 for just US$6.47 per month.  

Philip Morris is currently developing and distributing a number of tobacco smoking alternatives. However, its biggest earner remains to be its electrically-heated smoking iQOS system. Unlike traditional cigarettes, the iQOS system heats tobacco until it becomes an aerosol that contains nicotine. Similarly, current vaping systems heat up liquids, called e-juice, which may or may not contain nicotine.

E-cigarettes or vapes have become very popular in the UK, with its government fully embracing the technology. Some experts have revealed that using these electronic devices is much less harmful than smoking normal cigarettes, which can produce harmful chemicals such as hydrogen cyanide, formaldehyde, lead, and other carcinogens. Some government programs and institutions are even encouraging people to switch by offering them insurance discounts and other incentives.

According to Philip Morris' CEO Andre Calantzopoulos, he hopes that the company would someday stop selling traditional cigarettes altogether. However, that goal may still require a lot of time. The executive explained that moving to other industries makes sense in a public health and financial standpoint.

Focusing more on e-cigarettes will benefit shareholders as the products are not categorized as cigarettes, which means that they have a lower excise tax and ultimately produce better margins. Calantzopoulos further stated that the move to smoking alternatives and to other industries is his company's way of slowly moving out of cigarettes, which would be better for everyone.

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