Main site > MoneySavingExpert.com Forums > Essential Money > Insurance & Life Assurance > Smoking after Taking out Life Insurance (Page 1)

IMPORTANT! This is MoneySavingExpert's open forum - anyone can post

Please exercise caution & report any spam, illegal, offensive, racist, libellous post to forumteam@moneysavingexpert.com

  • Be nice to all MoneySavers
  • All the best tips go in the MoneySavingExpert weekly email

    Plus all the new guides, deals & loopholes

  • No spam/referral links
or Login with Facebook
Smoking after Taking out Life Insurance
Closed Thread
Views: 4,920
Thread Tools Search this Thread Display Modes
# 1
SuzieGirl
Old 18-07-2011, 2:59 AM
MoneySaving Convert
 
Join Date: Oct 2005
Posts: 31
Unhappy Smoking after Taking out Life Insurance

Hello

I wonder whether anyone can give me some advice.

My friend is having a problem getting her late husband's life insurance paid out because he had smoked off and on in the few years prior to his death.

He took out life insurance over 10 years ago and the application form asked if he had used any tobacco products in the past 12 months. At the time he hadn't smoked for over 2 years so, quite rightly, he ticked the "no" box on the form.

A couple of years later he started smoking again. not regularly but at social events etc.

The insurance company say he should have told them he'd started to smoke again and have rejected the claim. Is that right? Can they do that? I must say I was surprised.

Such a distressing time made worse by this awful situation.

I'd appreciate any advice which I can pass on to my distraught friend.
Thank you
SuzieGirl is offline
Report Post
# 2
keith1950
Old 18-07-2011, 5:15 AM
Fantastically Fervent MoneySaving Super Fan
 
Join Date: Apr 2007
Posts: 2,075
Default

Hi, as well as asking about smoking in the previous 12 months before the start of the policy, all life insurance documents I have seen have forms enclosed saying that you MUST notify them of ANY change to the initial statement of terms and conditions.

I am sorry but he appears to have voided the policy himself.

Last edited by keith1950; 18-07-2011 at 5:57 AM.
keith1950 is offline
Report Post
# 3
vaio
Old 18-07-2011, 11:40 AM
Deliciously Dedicated Diehard MoneySaving Devotee
 
Join Date: Jan 2007
Posts: 11,836
Default

Presumably they would still have offered cover to him as a smoker but at an increased premium in which case they should pay out pro rata to the premium he did pay compared to what he should have paid.

Give the FOS a ring to discuss.

If the policy doesn’t mention the need to notify the change then they should pay out in full.
vaio is offline
Report Post
# 4
ExpertAdvice
Old 18-07-2011, 11:48 AM
MoneySaving Convert
 
Join Date: Apr 2011
Posts: 92
Default

After reading your post, I spoke to underwriter of one of the major insurers and they said that when the policy is taken out, it is underwritten as per the medical conditions and other facts at that time.

Just like any other medical condition, you dont need to notify them of change in smoking habits and they would still pay the full claim in case of death.

But, of course it would depend on the T&Cs from insurer to insurer. Why dont you have a look at their T&Cs and try to find out what it says? If it mentions clearly that you need to notify them, then they wont pay out but if its otherwise, you have a case!!!

Best of luck!!!
ExpertAdvice is offline
Report Post
The Following 2 Users Say Thank You to ExpertAdvice For This Useful Post: Show me >>
# 5
vaio
Old 18-07-2011, 4:13 PM
Deliciously Dedicated Diehard MoneySaving Devotee
 
Join Date: Jan 2007
Posts: 11,836
Default

Quote:
Originally Posted by ExpertAdvice View Post
After reading your post, I spoke to underwriter of one of the major insurers and they said that when the policy is taken out, it is underwritten as per the medical conditions and other facts at that time.

Just like any other medical condition, you dont need to notify them of change in smoking habits and they would still pay the full claim in case of death.

But, of course it would depend on the T&Cs from insurer to insurer. Why dont you have a look at their T&Cs and try to find out what it says? If it mentions clearly that you need to notify them, then they wont pay out but if its otherwise, you have a case!!!

Best of luck!!!
Not exactly right because they also have to abide by the FOS rules on non disclosure as part of the “treat the punter fairly” ethos.

Obviously cases vary and this is just advice off a random bloke on the web but the general thrust of their rulings that I’ve seen is…

The need to disclose facts & changes must be “clear & unambiguous” so phrases like “you must disclose all material facts” are worthless. If the need to disclose was not clear & unambiguous then OP should get paid out in full.

Non fraudulent or inadvertent nondisclosure generally gets treated one of two ways:

If they would not have offered/continued cover had they been aware of the true facts then the policy is treated as if it never existed and the OP would get all the premiums back.

If they would have offered cover but would have charged a higher premium then the OP gets paid out pro rata based on the premiums they did pay compared to the premiums they should have paid.
vaio is offline
Report Post
# 6
ExpertAdvice
Old 18-07-2011, 4:29 PM
MoneySaving Convert
 
Join Date: Apr 2011
Posts: 92
Default

I dont necessarily agree with you VAIO. I would think that the policy is either valid or invalid so not sure about the pro rata business.

If their T & Cs clearly states that you need to notify the smoker/non smoker status and you dont, i think you are voiding the policy and they wouldn't be under obligation to pay anything. But I'm not 100% sure on this one so dont mark my words. First thing would be to check the T&Cs and then speak to FOS and see what they have to say.
ExpertAdvice is offline
Report Post
The Following User Says Thank You to ExpertAdvice For This Useful Post: Show me >>
# 7
vaio
Old 18-07-2011, 5:18 PM
Deliciously Dedicated Diehard MoneySaving Devotee
 
Join Date: Jan 2007
Posts: 11,836
Default

http://www.financial-ombudsman.org.u..._insurance.htm is worth a read, the pro rata bit is towards the end
vaio is offline
Report Post
The Following User Says Thank You to vaio For This Useful Post: Show me >>
# 8
MoneyBox
Old 18-07-2011, 8:17 PM
MoneySaving Convert
 
Join Date: Jun 2011
Posts: 57
Default

Was it a doctor's report that informed the insurance company that your friend's husband had taken up smoking again ?

I'm not familiar with the procedure carried out after a death and am wondering how they know.
MoneyBox is offline
Report Post
# 9
SuzieGirl
Old 18-07-2011, 10:30 PM
MoneySaving Convert
 
Join Date: Oct 2005
Posts: 31
Default

Thank you all very much for your replies.

Moneybox: They actually asked my friend directly whether he smoked and she said he did very occasionally. She made it absolutely clear that he had been a non smoker at the time the insurance was taken out and for several years afterwards.

Obviously she's kicking herself for being so honest but she wasn't really thinking clearly at the time. He didn't die from a smoking related illness so it seems very unfair whatever.

Reading all the replies I think her best bet is to go to the FO for help and advice. I don't know how clear and unambiguous the information was regarding letting them know of future lifestyle changes. I mean, what if he'd taken up hang-gliding or motorbike racing or drinking heavily or developed a cocaine habit? All things which increase your risk of early death. Unless you die from actually doing one of those things - how would they ever know? They didn't ask her how much alcohol he drank each day. Isn't it blatant discrimination to ask about smoking and no other high risk activities?

I don't know. I'm just really upset for her and everything she's dealing with at the moment. She's on the verge of losing her home as the insurance was meant to clear the mortgage and she can't manage the repayments on her own.
SuzieGirl is offline
Report Post
# 10
dunstonh
Old 18-07-2011, 11:07 PM
Mega Magnificent Maxi-Meticulous Uber-MoneySaving Magnate
 
Join Date: Apr 2004
Location: Norfolk
Posts: 74,220
Default

There is a test that can be done (i believe its a non evasive test that requires just one hair) and from that they can tell how much someone smokes and for how long. They can tell if its passive smoking or actual smoking too.
I am a Financial Adviser. Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
dunstonh is offline
Report Post
The Following User Says Thank You to dunstonh For This Useful Post: Show me >>
# 11
kingstreet
Old 19-07-2011, 10:29 AM
Deliciously Dedicated Diehard MoneySaving Devotee
 
Join Date: Feb 2011
Location: Stafford
Posts: 22,502
Default

It's a cotinine test and it's routine. It can be carried out on a deceased person.

I always use it when persuading clients not to lie about their smoking habits at application; along with my "don't give an insurer any excuse to decline your claim."
I am a Mortgage Adviser. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
kingstreet is offline
Report Post
The Following User Says Thank You to kingstreet For This Useful Post: Show me >>
# 12
MoneyBox
Old 19-07-2011, 11:43 AM
MoneySaving Convert
 
Join Date: Jun 2011
Posts: 57
Default

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 ?
MoneyBox is offline
Report Post
# 13
kingstreet
Old 19-07-2011, 12:13 PM
Deliciously Dedicated Diehard MoneySaving Devotee
 
Join Date: Feb 2011
Location: Stafford
Posts: 22,502
Default

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.
I am a Mortgage Adviser. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
kingstreet is offline
Report Post
The Following User Says Thank You to kingstreet For This Useful Post: Show me >>
# 14
MoneyBox
Old 19-07-2011, 12:32 PM
MoneySaving Convert
 
Join Date: Jun 2011
Posts: 57
Default

Thank you Kingstreet, that's much appreciated.

I suppose I'd best start rooting around for the policy and take a look.
MoneyBox is offline
Report Post
# 15
Tippytoes
Old 19-07-2011, 1:27 PM
Serious MoneySaving Fan
 
Join Date: Oct 2009
Posts: 920
Default

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?
Tippytoes is offline
Report Post
# 16
kingstreet
Old 19-07-2011, 2:13 PM
Deliciously Dedicated Diehard MoneySaving Devotee
 
Join Date: Feb 2011
Location: Stafford
Posts: 22,502
Default

Quote:
Originally Posted by Tippytoes View Post
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!

Quote:
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.
I am a Mortgage Adviser. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
kingstreet is offline
Report Post
# 17
weighty1
Old 19-07-2011, 3:19 PM
MoneySaving Stalwart
 
Join Date: Mar 2010
Location: LEEDS
Posts: 355
Default

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
weighty1 is offline
Report Post
# 18
kingstreet
Old 19-07-2011, 4:22 PM
Deliciously Dedicated Diehard MoneySaving Devotee
 
Join Date: Feb 2011
Location: Stafford
Posts: 22,502
Default

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!
I am a Mortgage Adviser. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
kingstreet is offline
Report Post
# 19
money_maker
Old 21-07-2011, 12:45 PM
MoneySaving Convert
 
Join Date: Feb 2011
Posts: 94
Default

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
money_maker is offline
Report Post
# 20
starrystarry
Old 21-07-2011, 6:56 PM
Fantastically Fervent MoneySaving Super Fan
 
Join Date: Dec 2008
Location: At the edge of chaos, generally.
Posts: 2,179
Default

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
starrystarry is offline
Report Post
Closed Thread

Bookmarks
 
 




Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off

 Forum Jump  

Contact Us - MoneySavingExpert.com - Archive - Privacy Statement - Top

Powered by vBulletin® Copyright ©2000 - 2014, Jelsoft Enterprises Ltd.

All times are GMT +1. The time now is 5:33 AM.

 Forum Jump  

Free MoneySaving Email

Top deals: Week of 27 August 2014

Get all this & more in MoneySavingExpert's weekly email full of guides, vouchers and Deals

GET THIS FREE WEEKLY EMAIL Full of deals, guides & it's spam free

Latest News & Blogs

Martin's Twitter Feed

profile

Cheap Travel Money

Find the best online rate for holiday cash with MSE's TravelMoneyMax.

Find the best online rate for your holiday cash with MoneySavingExpert's TravelMoneyMax.

TuneChecker Top Albums

  • VARIOUS ARTISTSNOW THAT'S WHAT I CALL MUSIC! 88
  • ED SHEERANX (DELUXE EDITION)
  • KATE BUSHTHE WHOLE STORY

MSE's Twitter Feed

profile
Always remember anyone can post on the MSE forums, so it can be very different from our opinion.
We use Skimlinks and other affiliated links in some of our boards, for some of our users.