The Truth About Tobacco Insurance

Introduction

I was recently talking with a financial planner friend of mine who is frugal, but still enjoys the finer things in life. He bought a used, foreign sports sedan. He takes his lunch to work most days, but enjoys a good dinner out. He also smokes cigars, but doesn't think he should have to pay smoker rates for his life insurance.

I know when I first entered the insurance business, I was told to say something like, 'It doesn't matter if you smoke an occasional cigar or a pack of cigarettes a day. If you test positive for nicotine, insurance companies give you smoker rates.' I was wrong.

If you are my wife, you need to read that last sentence again because you'll never hear it again.

The Details

All joking aside, what the insurance companies most commonly test for is called cotinine. It is a byproduct your body creates as it metabolizes nicotine and gets it out of your system. It can actually hang around for such a long time that if you were thinking about not smoking to cleanse it out of your system prior to the insurance exam, you might as well quit smoking for good since the first 2-3 weeks are the hardest.

Many people also don't think about it at first, but insurance companies routinely order your medical records, so if you ever told your doctor that you smoke, or you smoke cigars or chew tobacco, you can be pretty certain your doctor or the nurse wrote it down. It is, after all, medically relevant. I have personally seen a case where the insured told her agent she used drugs 15 years ago but quit. Then later mentioned to her doctor only three months before applying for insurance that she did some cocaine at a party. Lying on your insurance application is a big no no.

Besides the obvious reason that lying is not morally right, and the insurance company will most likely find out the truth anyway, lying has other negative side-effects. If you do manage to get away with lying during the initial underwriting phase, but then die during the contestability period, you might not have as much life insurance as you thought. In fact, a good majority of people who file death claims during the contestability period (the duration varies from state to state) will go through another examination posthumously. If a material misstatement is found, like smoking cigars or a pipe when you said you never smoked, the premiums will be refunded instead of the death benefit going to your beneficiary. Yikes!

The Truth about Tobacco Insurance

Now that you know to tell the truth, let me tell you why I was wrong. The truth is that cigar smokers, pipe smokers, and tobacco chewers can get non-smoker rates on their life insurance. Many insurance agents don't even believe this when they hear it. I know I didn't. If this describes you, you fall into an underwriting category known as “alternate tobacco”. There are a handful of companies that are rated A+ or better that can offer non-smoker rates even if you test positive for nicotine. Don't search on how to flush nicotine out of your body. Just tell the truth and let us help you find the right life insurance company.