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By Juliette Fairley

When Alex Grebe signed up for term life insurance, he lied. The 28-year-old stated that he is tobacco-free. "I know not to tell insurers the truth," said the Manhattan resident, who smokes cigarettes. Grebe only pays $50 a month for his term life insurance, but had he revealed he was a smoker, he would have paid more than three times as much as a non-smoker for the same policy, according to a new InsuranceQuotes.com report.

A 45-year-old nonsmoking woman pays $544 per year for a term life policy with half million in coverage for 20 years but with a smoking habit, her rate goes up 269 percent or $2,600 a year.

"Smoking causes one in five deaths in the U.S. and has been linked to many diseases like diabetes, lung and heart disease which are the three health issues that we know about," said Laura Adams, senior analyst with InsuranceQuotes.com. "This is something insurers watch closely."

Of course it's hard for insurers to know when people like Grebe lie about their smoking habit. "I named my younger brother as the beneficiary," he said. "He needs the money."

Will the Insurance Company Find Out?

Chances of an insurer inquiring about a death are low unless it's suspicious. "Insurers wouldn't have a reason to know a policy holder smokes unless they investigate," Adams said. "This only happens when there's a question about the death or if the policy is worth more than $1 million."

One way an insurer could determine whether a smoker is fibbing is by requiring an annual physical. "But that would be up front," said Adams. "It's not something they can surprise you with."

Blood work that could detect nicotine is typically not mandatory for term life policies, which can be part of a policy's appeal. "Insurers are probably charging higher rates to adjust for the risk that an applicant is lying when they approve you without a physical. It's a gamble that the insurers are aware of," said Adams. "Insurers create statistical models that forecast how long an applicant is likely to live."

Regardless of whether an applicant smokes or not, insurance rates rise as people age. A 35-year-old pays 27 percent more than a 25-year-old for the same coverage, and 45-year-olds pay 120 percent more than 35-year-olds. "You can save a lot of money by getting life insurance while you're young," Adams said. "By locking in a level-term policy in your 20s or early 30s, you will benefit from much lower rates while protecting your loved ones for decades to come."


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13 Comments

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jwells1008

This is unethical, misleading and fraudulant. Any significant amount of term life will require Medical records ( your Dr. knows you smoke ) and or a Paramed exam where blood and urine are taken and sent to an independent lab for analysis.

How can anyone take a site seriously that encourages people to lie?

August 05 2014 at 8:58 PM Report abuse -1 rate up rate down Reply
JOHN

NEVER buy term unless you might have a good reason. My wife bought term life and when the term was up the company wanted to jack the rates to about 6 times as much

August 05 2014 at 8:46 PM Report abuse rate up rate down Reply
turnoy

Misrepresentation or fundamental omission in the inducement [application process representations] are sufficient for death benefits not to be paid during the first two years after a policy is issued; fraud is a permanent defense against paying claims. Smokers who don't disclose their use of tobacco products are running the risk that for whatever reason{s} - spouse, kids, etc, that they sought to obtain life insurance won't be getting the proceeds. The intent to defraud the insurer will hang over you... forever. Insurers aren't fools and the more coverage involved the greater the likelihood of an insurer performing a claims investigation before they pay up. Most physician's and/or hospital records indicate whether or not there was evidence of tobacco use and autopsy reports [almost always accompanying accidental deaths] are more than likely to report the condition of lungs, etc.
If those depending on you actually need the protection of life insurance, be honest and deal with it as such. The publishing of this article was profoundly irresponsible. My advice is to do what's right, or - die to regret it; at least your surviving heirs could regret your dishonesty.

August 05 2014 at 6:50 PM Report abuse -2 rate up rate down Reply
Real America

Juliette this is not only inaccurate it is dumb. Most term life products require at minimum a urine or saliva sample including a test for nicotine. Otherwise, they are probably a product that is simplified issue and priced as such..so not a very good value anyway. You are also recommending fraud which is a crime, by advising prospective applicant to lie on their insurance application. Some insurers and state do prosecute this crime. Claims are reviwed for any factual misrepresentations and denied on that basis if possible.

August 05 2014 at 4:17 PM Report abuse rate up rate down Reply
smiles41

BOLD smokers? How about just plain dumb, stupid, ignorant, naive smokers, but bold? thats ridiculous! And stop patting yourself on the back for LYING to the insurance company...it can come back and bite you where it really hurts...

August 05 2014 at 3:21 PM Report abuse +1 rate up rate down Reply
Cool Hand

My advice to people is "never give an insurance company the ability to deny a claim". Because they will. They will never say "we really don't have to pay out this $100,000, but we're going to anyway, because you seem like a nice guy and your brother needs the money." And if you provide them with false information, and they catch you, they WILL deny the benefit.
I'm really starting to question some of the financial advisors on this site. They seem either ignorant, or just not qualified.

August 05 2014 at 1:05 PM Report abuse rate up rate down Reply
cjtoy7

i know 50 non smokers i grew up with that are dead now, and i'm still alive. shame on you dumb asses for you stupid logics, why dont you tell the public the truth or shut the hell up. all my friends died from alcohol related illnesses, but you are not going to tell the truth,WILL YOU.

August 05 2014 at 11:50 AM Report abuse rate up rate down Reply
Mark

I imagine you can make ALL kinds of money thru insurance fraud of one sort or another. I've just never seen it recommended on a financial web site.

August 05 2014 at 10:15 AM Report abuse +2 rate up rate down Reply
1 reply to Mark's comment
jdykbpl45

Only on AOL and Huffington Post.

August 05 2014 at 4:45 PM Report abuse +1 rate up rate down Reply
gfy.gfy

Blood and urine samples before each term life I've signed up.for, but no annual physical requirement.

August 05 2014 at 8:48 AM Report abuse rate up rate down Reply
malcolm

after 2 years they can't contest a claim in most states before the 2nd year they'll pull every record they can find to deny the claim.

August 05 2014 at 8:06 AM Report abuse rate up rate down Reply