How Would a Life Insurance Company Know if you were a Cigarette Smoker?

Life insurance policies are taken out by millions of people from all around the world, many of whom differ greatly in their physical health and their financial well being.  Life insurance policies are a contract between the policy owner and the insurer, who agrees to pay out a certain sum of money at the time of death or the onset of serious illness.  The policy owner, in return, is obliged to pay regular premiums to the insurer, and correctly notify them of any prevailing medical and health conditions.  Traditionally, the three main variables that insurers have been interested in when employing statistical mortality tables have been age, sex, and the use of tobacco, all of which can have a large effect on the price of the life insurance premiums that need to be payed.  The smoking of tobacco and the use of cigarettes can make life insurance premiums much higher for policy owners, many of whom wonder exactly how their insurers know that they are cigarette smokers in the first place.

Insurance is a huge international business that generates billions of dollars in revenue every year, and life insurance companies are well known for their ability to find out information about policy holders.  All life insurance policies require that a contract is entered into, and the cost of individual premiums is dependent on a number of important factors.  Actuaries are the professionals that are involved in determining the price of individual premiums, through using mortality tables and actuarial science based in mathematics and statistics.  While family history and unknown health conditions can impact on the actual rate of mortality for policy owners, many conditions remain unknown to life insurance firms.  Tobacco smoking, however, is one factor that is well known to insurance firms, who base the price of their premiums partly on how individual policy owners respond to an initial group of questions.  Before a life insurance policy is written up, insurers will want to know whether people are smokers or not, a fact that can have a large effect on the cost of ongoing premiums.

There are two primary ways that individual life insurance companies will know if you are a smoker.  Firstly, they will ask you when the initial contract terms are being written up, and secondly, they can also find out through medical tests either prior to or after death.  While most life policies do not require extensive medical tests prior to a contract being entered into, the vast majority do require proof at the time of death.  If an insurance company do find evidence of smoking at the time of death or the onset of illness, and this was not documented in the initial contract, they will not make a payout and the beneficiary of the policy may not see any money at all.  The evidence of tobacco smoking is generally easy to see for medical professionals, who can test for nicotine related continine via mouth swabs and blood tests, which have a 30-60 day residual level.  Even if a medical test was not undertaken at the time a life insurance contract was being drawn up, insurance companies are often able to obtain information through your health records.

http://news.bbc.co.uk/2/hi/health/5360926.stm