How smoking affects your life insurance rate (your insurer will know)

Neil Bartlett

If you’re thinking of getting a life insurance policy, you’re probably wondering which company is best to go with. But your life insurer is also assessing you as an applicant — and one thing insurers look for is whether you’re a smoker. What happens when you apply for an individual life insurance policy?

NetQuote spoke with Hank George, who’s been in the life insurance underwriting business for 45 years. He specializes in medical risk and is a teacher and consultant to insurance companies. George has spoken and written extensively about tobacco and insurance coverages..

He advises readers on how insurance companies rate smokers, what they know about you, newer tobacco products such as e-cigarettes, patches and hookahs, and what happens if you don’t tell the truth about your tobacco use.

Q. How can a life insurer know about your smoking history?

A. When you apply for a life insurance policy, typically you’ll be asked a handful of questions about your medical history. A likely one is, “Do you use or have you used tobacco or nicotine products?” They might also ask, “If you’ve stopped, when did you quit?”

If you’ve stopped using tobacco for at least three to five years, companies typically will charge you the same rate for life insurance as a nonsmoker.

If you buy a higher amount of coverage, usually around $100,000 and above, the company collects a saliva or urine sample. They’re testing for cotinine. When nicotine is absorbed into the body, it’s converted into cotinine.

Everybody’s metabolism is different and you don’t know how long it’ll stay in your system. It is an urban myth that cotinine will stay in your system for many weeks.

But if you’ve used tobacco or nicotine product such as a patch, gum or other product relatively recently, you’ll test positive.

Q. What’s more important from the insurance company’s standpoint — how much you’re smoking or how long you’ve been smoking?

A. Ninety percent of deaths from smoking are due to cumulative use and not whether a person is smoking today. An emerging way for insurance companies to tell is to ask you two questions: “How many years have you smoked?” and “How much do or did you smoke today?” Then the insurer can calculate what’s called “pack years” – how many years you’ve smoked times the number of packs a day.

Q. Why do insurers charge smokers more than nonsmokers?

A. The mortality rate for smokers is much higher than for nonsmokers. There’s a threshold — if you’ve smoked for five years and abstained for 10, the effect is negligible. But if you’ve smoked for 50 years and quit for five, you’ve had too much exposure to tobacco and you’re a high risk for early death.

Insurance is all about risk. The Centers for Disease Control and Prevention says smoking causes many types of cancer, not to mention lung cancer, which is the leading cancer cause of death among women and men. Smokers are up to six times more likely to experience a heart attack than nonsmokers.

Q. What if you’re using e-cigarettes, patches or gum that are helping you wean off cigarettes?

A. The test can’t reveal whether you’ve been smoking or using a patch or gum that delivers enough nicotine to assuage someone’s craving. That’s why you’re asked about nicotine use. E-cigarettes are basically an alternate nicotine delivery system.

Two emerging tobacco products are moist snuff and hookah. You’re deriving nicotine and thus cotinine from each. If you use tobacco using a hookah, the mist doesn’t diminish the nicotine content. The smoke is as bad, or worse, than smoking unfiltered cigarettes.

Q. What happens if you fudge the truth? Why is it important to be forthright with the insurance company?

A. If an applicant reports an illness or the applicant is suspected (of omitting information), life insurers routinely obtain medical records. Studies show that 10 to 15 percent of smokers don’t admit to their smoking habit.

But medical records often contain specific references to cigarette smoking. This is one way that lying about smoking is unmasked during the underwriting process.

If you test positive on a cotinine test, the company knows you’ve consumed nicotine. Then you’re likely to receive a “counteroffer” of insurance at a smoker’s rate.

And with life insurance, there’s a two-year interval called the contestable period, starting when the policy goes into force. After the life insurance policy is issued, your insurance company can challenge any potential claims during that time.

You’re obliged to truthfully answer questions about tobacco use. If you don’t, you’re at risk of death claims not being paid, at least in the amount anticipated, during the contestable period. If you’re not honest, you’re rolling the dice.