Smoking after Taking out Life Insurance

MoneyBox_2 · 19 July 2011 at 11:43AM

Thanks for the replies .... & Suzie, my best wishes to your friend. I hope things work out ok for her.

I'm sorry to go off course but since I read this thread I've been thinking about a joint life insurance policy that we took out over 20 years ago.

At the time, myself and OH smoked roughly 17 a day and this was entered on the form. These days we might smoke anywhere between 20 and 40 a day and I'm wondering if I should be getting in touch with the insurance company to tell them ?

This particular insurance company are about to be taken over by another insurance company, with which we have another life insurance policy, taken out in the last couple of years, and in which we declared ourselves as 40 a day smokers to be on the safe side.

Of course they will soon hold both of our life insurance policies, one stating that we smoke 17 a day and one 40.

Any ideas what the best course of action is please ?

kingstreet · 19 July 2011 at 12:13PM

If there is a duty of disclosure written into the contract, it's more likely to be an absolute, smoking or not smoking.

You should not have to disclose increases or reductions in your smoking habits. Saying which, if you stop smoking and can declare you have not smoked for twelve months and have no intention to smoke in the future, some companies will give you the non-smoker discount. That's the absolute - all or nothing.

As with any insurance contract, the first reference should be to the documentation which applies to the individual's policy as we can't pre-empt the differences between one policy and another.

MoneyBox_2 · 19 July 2011 at 12:32PM

Thank you Kingstreet, that's much appreciated.

I suppose I'd best start rooting around for the policy and take a look.

Tippytoes · 19 July 2011 at 1:27PM

Hi all

Can someone please clarify on this scenario. Endowment insurance taken out on couple, one a smoker, the other not. Endowment runs 25 yrs, during which time the smoker gives up. Reduced monthly premiums as a result? Or does this make no difference whatsoever?

kingstreet · 19 July 2011 at 2:13PM

Tippytoes wrote: »

Hi all

Can someone please clarify on this scenario. Endowment insurance taken out on couple, one a smoker, the other not. Endowment runs 25 yrs, during which time the smoker gives up. Reduced monthly premiums as a result? Or does this make no difference whatsoever?

Ask!

if you stop smoking and can declare you have not smoked for twelve months and have no intention to smoke in the future, some companies will give you the non-smoker discount

Don't leave it though. They won't backdate it.

weighty1_2 · 19 July 2011 at 3:19PM

Hi Suziegirl,

I can appreciate the difficulty your friend finds herself in. From an underwriting point of view though the terms offered by an insurance company are those based on the underwriting at the time of the application. I am not aware of any mainstream insurance provider that expects someone to notify them of changes to their circumstances. This would cause 1000's of declined claims each year since clients would either forgot to notify the insurance, or simply would not be aware a change to their health was relevant.

Vaio is right regarding the non-disclosure issue, however, this is generally only seen as relevant at the point of application and whether the non-disclosure was accidental, negligent or deliberate.

It sounds to me like they are trying it on (which as a broker is disappointing to hear with the new ABI guidelines) and I think rather than go to the FOS in the first instance your friend should ask to see where in the T&C's it states the client needs to notify them of any changes.

Good luck to your friend

kingstreet · 19 July 2011 at 4:22PM

I've just looked through a Scottish Provident SAM guide, quote and application form.

It sets out the qualification for a non-smoker discount, but nowhere does it suggest an ongoing disclosure regime.

ie - If you are a non-smoker at the point of application, have the policy issued and then two years later choose to start smoking there is no declaration you've signed to say you'll tell them you've started smoking. Nor does it say anywhere starting to smoke will invalidate a claim.

I've been a non-smoker for years and I believed I'd invalidate my cover if I started to smoke. I'm off for a crafty fag!

money_maker_2 · 21 July 2011 at 12:45PM

Interesting thread. Im sorry to hear about your friend and hope it gets resolved soon. What insurance company was it with out of interest?

Thank you for making me aware of this. It got me thinking as me and my OH are not smokers, which it states on our joint policy, but he sometimes has a cheeky smoke if hes out with his mates. When we took out the policy neither of us had smoked in the last year, but since then I know he has had a few on and off. I looked through all the paper work given to us (filed it all away as soon as it arrived so nothings missing) and nowhere does it state that if either of us started smoking we have to notify them.

Out of interest, if he was to die and they tested him and found he did smoke, how would they know if he had smoked before or after the policy was taken out? Say for example he started heavily smoking every day for the next year and then died. Obviously a test could be done to prove he had smoked, but how would they know whether it was before or after the policy was taken?
Is there such an accurate test that can tell you when a person started? Im thinking there must be otherwise people that do smoke and lie about it to get a cheaper insurance policy could then just claim they smoked after the policy was taken out.
Confused!!!!! lol

starrystarry · 21 July 2011 at 6:56PM

The scenario that the OP has painted doesn't make sense, so I think we're missing some details here. On receipt of a death claim the insurance company would not have just asked his wife whether he smoked. She can't answer questions on his behalf. It's possible that they got a report from his GP which suggested he had smoked and they may have had a conversation with his wife about this during which she admitted that he sometimes smoked. They would not refuse a claim on the basis of a conversation with the wife.

Post #2 is incorrect (unless keith has not seen many life insurance documents!). They all say that you must notify any changes before the policy starts, but the duty of disclosure ends when the policy goes into force. Weighty & kingstreet are right, policies with an ongoing duty of disclosure make no commercial sense. They would be very costly for the insurance companies as they'd constantly need re-underwriting. Underwriting is an expensive resource. However there may be policies that state customers must notify if their smoker status changes (I'm not aware of any) so the OP needs to check the T&Cs.

Finally, no insurance company would carry out a cotinine test on a dead person. The very thought :eek:

GingerWarrior · 21 July 2011 at 8:43PM

I work for a life insurance company, and our particular one has the duty of disclosure ends when the policy goes into force. A number of phone calls I get from policy holders saying they've started smoking, and when I ask them if they did at the point of application and they say they hadn't, then I tell them that we don't need to know of that disclosure.

Then you have the ones who have received their policy documents who look through the disclosures then call up to say they have the odd cigarette when they're out drinking, so not a real smoker! I then have to be the bearer of bad news saying to them that we class them as a smoker and change their status and that the premium suddenly increases quite a bit.

To the OP - I would read through the Cover Details for the company, which you would have received when the policy was placed on risk and see if there's anything about duty of disclosure once the policy is activated.

Smoking after Taking out Life Insurance

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