You may have seen many anti-smoking campaigns on social media or television that say, ‘smoking kills.’ It indeed does. Tobacco and other chemicals in cigarettes are detrimental to your health. It affects your various body parts, weakens them and eventually leads to fatal consequences. Besides, your smoking habits also significantly impact your term insurance; it increases the premium by up to 25-30% compared to others for getting similar coverage.
As per IRDA (Insurance Regulatory and Development Authority), the apex body that protects the interest of the insurance policyholders and regulates the insurance industry, not disclosing tobacco usage is the most common mistake people make while filling out the application form. But why do people lie about their smoking habits to their insurance companies? The most common reasons are – avoiding high premiums and maintaining eligibility for getting term insurance coverage.
Are there no consequences for lying to the insurer? Of course, there are consequences. This blog discusses the importance of being honest and disclosing smoking habits while buying term insurance.
Who is considered a smoker by an insurance company?
A life insurance company puts you in the ‘smoker’ category if you answer ‘yes’ to the question on smoking in the insurance application form. You need not necessarily smoke a cigarette to be considered a smoker by the insurer. If you use nicotine in any form, be it cigarettes, cigars, nicotine patches or chewing tobacco directly, you are a smoker for the insurers.
Also, whether you smoke or use nicotine products occasionally or regularly, you must answer ‘yes’ to the do you smoke question in the application form. This is as per the insurance standards. But, if you have been a smoker and have altogether quit the habit while buying the policy, you can inform the insurer accordingly, get the non-smoker quote from the insurer, and get the coverage at a lower premium. However, you must stay clean/sober for at least two years to enjoy this benefit.
What happens if you lie to the insurer about your smoking habits?
If you have the habit of smoking, don’t lie about it. When the insurance companies process your application, they verify all the details you mention. They have many ways of discovering whether you have lied or deliberately hidden any fact. For example, they conduct a medical test to assess your health. It is a standard procedure before insurers offer term insurance coverage.
During the medical test, if the company finds out that you have lied about your nicotine or tobacco usage, they may refuse coverage. In the worst-case scenario, if the insurer finds that your demise is linked to your tobacco-using habits, they have all the right to deny paying the death benefit to your family. This is the worst thing that can happen to them. Imagine they may be already dealing with the mental stress of losing a family member, and on top, they may face financial hassles.
In a nutshell, if you lie about your smoking habits, you are surely going to face certain consequences, including:
- The insurer may deny offering you’re the coverage
- You will have to pay a higher premium than others
- The insurer will reject your claim application
So, as they say, ‘honesty is the best policy,’ it perfectly applies to insurance buying. Tell your insurer about your smoking habits upfront, and avoid facing any unwanted consequences later on. After all, the primary purpose of buying term insurance is to protect your loved ones financially, right? Lying to the insurer will put their financial security at risk.