Final answer:
The difference in annual life insurance premiums between a smoker and a non-smoker is influenced by the higher risk associated with smoking, which leads to actuarially fair premiums that reflect the increased likelihood of a claim. Without the exact premium rates, we can't specify the difference, but smokers generally pay more than non-smokers for life insurance.
Step-by-step explanation:
The question concerns a comparison of annual life insurance premiums for a smoker and a non-smoker, both aged 35 taking out a $100,000 policy for a 20-year term. With the information provided about various risk factors and how they affect insurance premiums, we can infer that different risks such as smoking, family history of illness, age, gender, and driving record can impact the cost of insurance.
Insurance companies adjust premiums based on perceived risk, creating actuarially fair premiums where the cost reflects the likelihood of a claim being made. A smoker, for instance, has a higher risk of health-related issues compared to a non-smoker and therefore might be charged a higher premium for life insurance.
Without specific figures for the scenario presented, we cannot determine the exact difference in premiums between a smoker and a non-smoker, but we understand they would likely be significantly different.
If we take into account the example provided where insurers consider family history of cancer as a risk factor, we could expect similar actuarial calculations to apply to smokers versus non-smokers, with smokers paying higher premiums based on the enhanced risk they carry of premature death due to smoking-related illnesses.