Life insurance up in smoke

October 13, 2005 4:59 AM

Life insurance: When my husband and I got our term policies years ago, he was a smoker and paid a higer rate.

He quit about 7 years ago and we were able to get the rates reduced after he had been smoke-free for a year. However, he's been smoking again for a while and I don't know what to do. If we come clean with the insurance co., our rates go up and I'm also nervous about being dropped. If we keep going as is, I'm afraid that if he dies (God forbid) they could deny the claim due to fraud.

Am I being overly nervous? Insurance seems like an industry where telling the truth can bite you in the ass sometimes.

This is a term policy with Northwest Mutual, if that helps.

posted by anonymous to work & money (7 comments total)

I was just hearing on the radio about a family who were screwed when the father died because of this very issue. The odds are, they won't drop you. But your premiums could triple.
posted by glenwood at 5:33 AM on October 13, 2005

My partner is in the insurance industry, so I asked her. She said that when they re-rated his policy as a non-smoker, that became his new rate. They shouldn't deny you a claim based on a life change AFTER the renegotiated rate.

I may not have explained this very well, but she basically said you should be fine if you have to make a claim.
posted by fictionaldepth at 5:56 AM on October 13, 2005

I work in the insurance industry and "you should be fine" are words I rarely hear. I don't know the answer to your question, but I'd read the contract and see what it says. Life insurance contracts are very explicit. If it's a group contract (ie, your husband has the insurance as a voluntary benefit through work), I'd have him talk to HR. In these instances, I've found, it is ultimately detrimental to try to hide the truth.
posted by MarkAnd at 8:45 AM on October 13, 2005

I'm also nervous about being dropped

Insurance companies do drop customers of health, home, and auto insurance all the time (or, the equivalent, raise the rates extremely), but that's because they're trying to screen out the ill, those prone to making a lot of claims, and bad drivers. But life insurance isn't an area where there is a lot of smallish claims, or fraud, or other similar issues.

In other words, I don't think they would drop you, once you're paying (if indeed you do have to, which seems reasonable) higher rates that are appropriate to your situation. I wouldn't make business sense.
posted by WestCoaster at 10:16 AM on October 13, 2005

Contact your agent / broker and ask them the question "off the record".
posted by adamfunman at 11:52 AM on October 13, 2005

In other words, I don't think they would drop you, once you're paying (if indeed you do have to, which seems reasonable) higher rates that are appropriate to your situation. I wouldn't make business sense.

The issue isn't whether they cancel the policy. There's no way for them to find out that you're smoking and it's not like they have PIs trailing you. The issue is whether they can not pay the claim if you die from emphysema after saying that you had quit smoking ten years ago (not that this is impossible even if you did quit smoking, but this is when they actually will investigate to see if you've made any false statements).
posted by MarkAnd at 1:02 PM on October 13, 2005

Actually, WestCoaster, now that I've read what you've written a little closer, I see your point, which makes my response peripheral to what you wrote. Sorry about that!
posted by MarkAnd at 1:04 PM on October 13, 2005