Can You Hide Smoking From Life Insurance Companies?

What if you lied about your smoking habit on your life insurance application? And what happens if the insurance company finds out?
How much do you have to smoke to even be considered a smoker? The answers might surprise you.

Life insurance companies like their policyholders to be in good health. So much so that some companies have three different premium
classifications: standard, preferred, or preferred plus. You're rewarded with lower premiums if you're super-healthy and haven't smoked
in five years because that reduces your chances of dying soon. Being just "normally healthy" requires that you haven't used nicotine in the
past three years and still gets you lower premiums. A standard rate requires that you have not used nicotine within the past year.

Who is Considered a Smoker?
In the life insurance world, you're considered a smoker if you answer "yes" to the smoking question on your insurance application. If
you're asked if you've used tobacco products, including cigarettes, cigars, and chewing tobacco, within the past three years — and you
have — your answer should be yes (likewise for questions going back two years and one year). If you enjoy a good cigar from time to
time or smoke just two cigarettes year, you are a smoker by insurance standards, even though the nicotine traces won't show up in your
required urine test. How should the occasional smoker answer that question? You should probably let your conscience be your guide.

You Can Sneak Through
With rates as competitive as they are, life insurance companies try to find out as much as possible about your health. Understandably, a
nonsmoker's application is likely to be examined a bit closer than a smoker's, especially the results of the urine sample. However, it is
possible for the nicotine level in a smoker's urine to be low enough to escape detection. In fact, according to a 1988 surgeon general's
report, your body metabolizes, or breaks down, nicotine within 72 hours.

The Centers for Disease Control and Prevention's Office on Smoking says that there's such a small amount of cotinine present in your
body after three days that it's either not detectable or attributed to second-hand smoke. Cotinine is a primary metabolite of nicotine and
is the most common identifier for nicotine levels in the urine. Therefore, even heavy smokers who can abstain for three days could
theoretically lie about their smoking and go undetected.

Is It Worth It?
So, if you "pass" your urine analysis, where do you go from there?

It goes without saying (but we'll say it anyway) that you should not lie on your insurance application. The application you sign becomes
part of your policy (you'll find it attached somewhere near the back), and the policy is a legal contract between you and the insurance
company.

Some insurance companies we spoke to say they have caught smokers who claimed to be nonsmokers during the underwriting process.
When this happens, the "proposed insured," as you are known, is simply given the smoker rate when the policy is approved. None of
the insurance companies admitted they would automatically reject you if they caught you lying.

As an extra precaution, The Horace Mann Cos. of Illinois performs random phone calls in which applicants are again asked, among
other things, about smoking. They hope to weed out liars through the one-on-one conversation or by spotting inconsistencies on the
policy application. On the other hand, Hartford Life and Annuity Insurance Co. in Connecticut is confident it could finger a deceptive
smoker during underwriting, pointing out that urine testing is required of applicants over the age of 16.

Lie, Die . . . Deny?
Let's continue the scenario: Your urine sample doesn't show enough nicotine to prove you're a smoker, so your life insurance policy is
issued at a preferred and/or nonsmoker rate. Then, the unthinkable happens: You die.

Most life insurance policies carry a two-year "incontestable clause" that allows the insurance company to challenge a death claim. If you
die within the first two years as a result of, say, a car accident, and it comes out that you were, in fact, a smoker, your insurer would
have the right to "rescind" the policy or simply deny the claim.

If you lied about smoking to Hartford Life and you died after two years, the company would pay the claim. However, a spokesperson
emphasizes that the insurer's underwriting is so stringent that it doesn't expect to have a problem with dishonest smokers.

If you die three years after your policy is issued, underwriters would take a closer look to see if anything on your application and
medical exam could be linked to smoking. A smoking-related illness, such as lung cancer or heart disease, would send up red flags, but
a fatal car accident clearly would not. Underwriters we spoke to agree that there must be very solid reasons for denying a death claim.
Another option for the insurance company is to pay a death claim equal to the amount of life insurance you would have purchased with
your money at a smoker's rate.

All the companies we contacted stated flatly that after a long period of time, such as 10 years, they would pay the claim. Once your
policy is this far past the two-year contestability period, linking your death to smoking is less important to them than not reneging on a
death claim.

Don't Ask, Don't Tell
It's statistically unlikely — but not out of the question — that an adult will take up smoking (most smokers start as teenagers). That said,
insurers generally don't care if you begin smoking after the policy is issued and, in the event of your death, would simply pay the claim.
The companies we spoke to stressed the importance of being truthful at the time you applied for the life insurance; they don't expect you
to let them know that you've started smoking after your nonsmoker policy is issued.

For example, Hartford Life says that you do not have to notify them if you start smoking after your policy is issued — your claim would
not be jeopardized, even during the two-year contestability period. Golden Rule Insurance Co. in Illinois also says it's not necessary to
inform them of a "new smoking habit."

Insurance Companies Aren't The Tobacco Police
Despite insurers' diligence, there are undoubtedly smokers who can slide through the underwriting process undetected. If you're caught,
the worst that can happen is that your policy will be issued at a higher rate. Insurance companies are not the tobacco police, after all.
And the longer your policy is in force, the less likely a death claim would be denied.

Even so, do you really want to put your family's security at risk just to save a few bucks on a premium? Would they want to possibly
battle out a contested claim after your death simply because you tried to pull the wool over the insurance company's eyes?