Should I tell my life insurance company that I smoke?
It may not stop you from getting a life insurance policy but if you don’t tell your insurer, you risk voiding your cover and losing any payout in the future.
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If you smoke, you need to let the insurer know during the life insurance application. A policy will cost you more but if you don't tell them, they can refuse to pay out when you or your beneficiaries make a claim. Let's have a closer look.
Life Insurance policies: your duty of disclosure
Regardless of the type of insurance cover being applied for, each applicant is required to answer each question in their application as truthfully as possible. In doing so, they are providing a "duty of disclosure".
Under the Insurance Contracts Act of 1984, applicants have a duty to disclose, before entering into the insurance contract every matter that is known that they know to be relevant to the decision on whether the company will accept the risk that they carry.
When applying for life insurance, your insurer will ask questions relating to your health, including your history of smoking. It's crucial that you answer these questions accurately so that the policy you're offered is valid.
So, you must admit to smoking, even if you do so only from time to time. In this context, smoking is defined as anything that contains nicotine such as cigarettes, chewing tobacco, vapes, e-cigarettes and patches.
How will an insurance company know if I actually smoke?
In the event of a claim on your life policy, the insurer will assess the policyholder's claim eligibility and verify the accuracy of the details provided in the application.
There are a few different ways an insurer can find out if you smoke:
- They can undertake medical tests to verify if you're a smoker in the event of a claim.
- They can run a verification process that can involve reviewing your Medicare and PBS (Pharmaceutical Benefits Scheme) records.
- The can contact the GP you had at the time of your application for more details.
In the event that the policyholder has concealed their habit, the insurance provider is entitled to refuse - or, at best, pay a smaller amount on - any claim made. This could come about, for example, if a coroner's report states that your death was linked to a smoking-related illness.
Can I get an adjustment of my life insurance premium if I quit smoking?
Most life insurance companies will treat applicants as non-smokers if they have quit smoking 12 months before the application has been submitted. You could be asked to take a medical exam. This may involve a blood test for nicotine.
If when you initially signed up as a smoker in the policy but became a non-smoker further into their policy, it may be possible to have your premiums adjusted to reflect a non-smoker status.
In the event that the applicant states they are no longer a smoker, an underwriter may investigate reasons for them stopping. The applicant may have been told to quit on medical advice after developing a smoking-related condition. They may be required to provide medical evidence that they have not only recently stopped smoking.
Check your superfund for cover
If your super fund offers life insurance there's a good chance you're covered as a group (not as an individual). This means you may already have cover without smoking status being a factor. But keep in mind that holding insurance within your super does generally offer less generous benefits overall.
You may want to speak with a representative from your super fund to see what the rules are around life insurance when starting a new job or increasing the amount you are covered for.
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How do life insurance rates compare for smokers and non-smokers?
Life insurance applicants that smoke can expect to pay about twice as much in life insurance premiums to those that don't smoke.
Non-smoker vs smoker
|Occupation||Accountant (Qualified)||Accountant (Qualified)|
|Premium Per Month||$40.13||$91.49|
Quotes taken as of April 2021. Prices are an estimate and are subject to change at any time.
So, how can I get competitively priced life cover?
Whether someone smokes is by no means a reason to be deterred from taking out life insurance, if anything it gives more reason to do so.
While all life insurance companies will charge a premium loading for people that smoke there are still ways to get affordable cover. A good place to start is by comparing quotes with an insurance consultant to give themselves the best chance of finding affordable cover.
There are hundreds of different policy options available in Australia from different types of providers and different underwriters will have different criteria for assessing applicants by looking at other existing conditions. An insurance consultant can help applicants find providers willing to offer affordable cover for their situation.
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