Several years ago, you took out a life policy. You had been a smoker but had quit 5 years previous to policy inception.
Because you were smoke-free you secured a preferred rating. Life became stressful, you went to a party and lit up with friends. Before you knew it, you bought a pack for yourself. It went from a weekly habit to a daily habit.
Now you are worried about your life policy because you’ve heard horrors stories about canceled coverage or denied claims. You just want to know if you are safe.
You want to privately ask your agent, “I started smoking after I already have an insurance policy; do I legally have to tell my insurance company?”
Consider this a private conversation.
We won’t tell anyone. You aren’t in danger of losing coverage, but here are the facts about smoking after policy inception.
Why Do Insurance Care About Tobacco Use?
First, why do life insurance companies care about tobacco use? Life companies are experts at predicting lifespan. It’s the only way they can fund future claims. Understanding lifespan helps them price coverage properly so they can guess when they might have to pay a claim. Of all the factors they use to determine life expectancy, smoking has the biggest impact on longevity.
Unfortunately, smoking creates a whole host of potential health problems. The obvious one is lung cancer or pulmonary issues like COPD. It can raise blood pressure leading to stroke. It creates stress on the vascular system, causing cardiac issues such as heart attacks or congestive heart failure. Smoking even contributes to other cancers besides lung cancer.
This is why they care about smoking.
How Do Life Companies Know if I Smoke?
Most life insurance policies will require you to have the medical exam prior to issuing the policy.
A life insurance exam is performed by a paramedic who will usually come to your house and perform a quick exam.
A life exam consists of:
So what are life insurance companies looking for on medical exams?
Many things. Primarily they chemical markers in your body that might indicate a medical condition. Cholesterol will be checked as well as liver enzymes and kidney enzymes. They are looking for potential cardiac issues or the presence of cancer or diabetes. But they are also looking for any drugs or chemicals you may ingest, and that includes nicotine.
Nicotine can be tested for in the blood, but it is usually detected in the urine. In reality, nicotine is not the substance medical companies will look for. They are looking for cotinine. Cotinine is a chemical byproduct your body produces to metabolize nicotine. If cotinine is in your system, the assumption is that you regularly consume nicotine-containing products.
For the most part, nicotine (or cotinine) is out of a person’s system within 30 days, however, if you are a heavy smoker it may be detected over a longer period of time.
To answer our original question, life insurance companies will know if you smoke based on the information you place on your application. They will verify it with the medical test.
What Will Life Insurance Companies Do if They Find Nicotine in my System?
If you stated on the application that you were not a tobacco user, companies will take one of two different actions.
First, they may deny you coverage. This means you will have to start the process all over again with another carrier. It may hurt your chances of getting a competition policy in the future because some companies will ask if you’ve ever been denied coverage. Now you will have to say “yes”.
Second, they may update the policy. You could go from a preferred risk to a standard tobacco user risk. If this happens, you are likely to see a 25-50% increase in premium. Yikes!
Who is Classified as a Smoker by Life Insurance Companies?
This is where it gets a little tricky.
There is a wide variety of guidelines among life companies when it comes to tobacco use. Cigarettes will always be on the bad list. However, pipes and cigars are a different story. Smokeless tobacco and e-cigarettes are seen in a different light as well.
Some companies will lump all nicotine-containing products together, even gum and patches. For those carriers, if you have nicotine in your system, you are considered a tobacco user.
Other companies are much more lenient. A couple cigars a month might be fine. Some even allow once a week usage without any penalty.
Smokeless tobacco and e-cigarettes are in another category as well. Many companies don’t penalize at all for their use.
The most surprising is the marijuana cigarette. Many companies don’t care and don’t lump it into tobacco use at all.
It’s a really confusing landscape. No matter your tobacco usage, make sure to talk with our agents about the diversity in company guidelines regarding tobacco use. Just because you found a competitive rate online (or TV) doesn’t mean you fit their guidelines. It may not be the best product for you. Just ask us, and we can present the best options.
But back to our original question….
Can Smoking Cancel My Life Insurance Policy?
A Tragic Story
Recently, I read a case where a man died 10 years after taking out life insurance. The widow submitted a claim on the life insurance policy, and the company balked. When he had taken out the policy he had been a non-smoker for 2 years.
As he filled out the application he checked the non-smoker box. A couple of years later, he started smoking again. Not daily, but occasionally at parties or socially with friends. The insurance company told the widow the policyholder should have told them he started smoking again and they rejected the claim.
This is unusual, but not unheard of. First of all, the agent should have stepped in and helped with the claim. But then again they may not have had an agent.
Some life policies have terms and conditions stating the customer must notify them of any changes to the initial statements of the terms and conditions.
It pays to read the contract language before taking out an insurance policy. Unfortunately, insurance language is incredibly obtuse and can be difficult to decipher. A good agent will be able to help translate an insurance policy. Don’t buy just a policy based on price, make sure you understand the insurance contract.
What if I Lie About Smoking on My Life Insurance Application?
It’s not uncommon for insurance companies to spot check customers over time. They are looking for fraud.
One way insurance companies detect fraud is to spot check applicants. This can be through phone calls or surveys. When talking with customers they hope to extract inconsistent information to help them detect liars.
Fraud cost insurance companies a significant amount of money every year. It’s easy for us as consumers to turn a blind eye to fraud even if we don’t participate in it. It doesn’t hurt us. It hurts the big giant insurance company with deep pockets who probably deserved it.
But it does hurt you. When insurance companies lose money, they recoup it with premium dollars. They pass that cost onto the consumer, and everyone’s rates increase.
The Incontestable Clause
Many life companies will include an “incontestable clause” in their policies. This protects them from fraud or “material misrepresentation” in the first two years of the policy life. “Material misrepresentation” is a legal nicety translated into plain English as “lying on the application”.
During that two year period, the company has the ability to cancel or re-rate the policy based on information discovered that was contrary to the original application.
Let’s review a scenario that does have the potential for negative consequences. Let’s say you buy a policy as a non-smoker. Life gets stressful, and within a year of taking out the policy, you begin smoking. Months later you die an untimely death.
The cause of death may have not had anything to do with smoking risks. It could have been a car accident or undiagnosed congenital defect. But during the autopsy or investigation, it is discovered you were a smoker, the insurer may have the right to rescind the policy or deny the claim.
Once You Have Quit Smoking, You Should be in the Clear
Thankfully, the above scenario is unlikely and most insurance companies take a “don’t ask, don’t tell” approach. Statistically, most adults who have never smoked will not become smokers later in life.
Even those who have quit, once they have been non-smokers for 2+ years don’t typically start again. Insurance companies are masters of statistics, and because of those stats, they don’t usually worry about behaviors after the policy is issued. Especially, once you are past the 2-year initial period they rarely make an issue of it.
Smoking After You Have Purchased Life Insurance – Takeaways
You buy life insurance to protect your loved ones, don’t you?
It’s not worth risking a life insurance payout to either lie on the application or jeopardizes it with future behavior. If you are worried about falling back into a smoking habit, this is something you should discuss with an agent. A good agent can guide you to companies more favorable to smokers and former smokers. They know the risk and are there to help you.
As an insurance broker, we have contracted with multiple companies with favorable rates for both smokers and non-smokers alike. Many of our companies have very liberal guidelines related to tobacco use. An occasional smoker may not be penalized for tobacco use. Regardless, of smoking status, we have access to the companies with the most favorable life premiums.
Perhaps you have life insurance today but are looking to increase coverage or convert the policy to a different form of coverage. Whether you’ve started smoking after your current coverage or not, we can help.
Contact us and let us not just give you a quick quote, but craft a policy that fits your needs and lifestyle with the most affordable coverage for you and your family.