What if the insured lied about his smoking?
What’s wrong with lying about whether I smoke?
The lie may be fraudulent, and the insurance benefits for you and your family may be at stake. After a federal judge found tobacco companies “guilty of lying about the health effects of smoking,” some cigarette users who lie on their policies may consider themselves excused from charges of insurance fraud, and the motivation for misrepresenting their own health risks may be even more significant. Cigarette users may be motivated to lie in order to obtain either (a) lower health insurance premiums or (b) maintain eligibility for life insurance policy or rates. In some states, lying about smoking for insurance purposes is a material misrepresentation, just like lying about health history. In others, the face amount of the policy may be adjusted downward if the policy holder misrepresents his smoking status.
What if I only smoke very small amounts of tobacco?
It is generally not up to the insured to determine how much “a little” is, but honest self-reporting is encouraged. Insurance policies are available for smokers, and holders of these policies are usually rewarded for cessation efforts. Health insurance policies generally have three nicotine/tobacco premium levels: 1) non-smoker/user, 2) non-user in last three years, or 3) non-user for five years.
I only smoke marijuana. Since it’s illegal, what should I do?
In some states, medical marijuana use is legal, and an insurance company can adjust its rates within that state. But health insurance companies usually adhere to the non-user, three-year, and five-year scenarios listed above. Whatever you smoke, you are a smoker.
How can anyone prove I lied about smoking?
It is difficult to prove material misrepresentation unless you admit to it. Nicotine leaves the blood stream after 48 hours of smoking cessation. But in the case of life insurance, when the cause of death is determined to be related to tobacco use, the costs to a family depending on an insurance annuity or health plan coverage may be devastating. In some cases, the insurance company will contest a case, and may carry the case beyond an insured’s financial means to fight.
What happens if the insurance company shows I lied about cigarette smoking?
The insurance company may sue to obtain legal costs, recover lost premiums, or seek penalties associated with fraudulent claims. And the premium amounts for smokers are significant-- typically three times the average low premium rate of non-smokers. But there may be other, more immediate costs for lying about tobacco (including chewing tobacco) use. Recognizing the impact on their bottom line, Whirlpool, Inc., fired 39 workers in 2009 who allegedly lied about their tobacco use. The greatest risk is incurred when a policy holder dies from tobacco use within two years of the policy’s issuance.