by John Darer® CLU ChFC CSSC RSP CLTC
There are several life insurance companies that will allow non-smoker rates for users of cigars, pipes, chewing tobacco, nicotine gum, lozenges and e-cigarettes, even with nicotine in the urine. In order to qualify you will still need to be a non-cigarette smoker for at least 12 months.
You will still need to complete the normal underwriting process and other risk factors could impact your cost of insurance or whether or not you are insurable.
Occasional cigar with buddies OK
"These rules have typically been formulated in terms of whether the misrepresentation was “material.” In some states, the insurance company’s right to defend or rescind is further limited by an additional requirement that the matter misrepresented actually contributed to the loss, contingency, event or hazard for which the claim is made. In other words, in a limited number of states, the insurance company may not deny a claim or seek rescission unless a “causal relation” exists between the misrepresentation and the actual loss. Under such statutes or case law, when there is an applicant who falsely claims to be a nonsmoker, the insurance company can escape liability if the then insured dies of lung cancer due to smoking, but not if the insured later dies of AIDS. Finally, in some cases, the insurance company cannot avoid liability even when the policy has been procured through outright fraud".
In addressing the Professional Planner forum, attorney George Berger of the New York law firm Phillips Nizer stated:
"All that the N.Y. Insurance Law requires is that there be a material misrepresentation in the application. Even an innocent misrepresentation will do and the common position taken by the insured that I told the broker or agent the truth but he failed to write it down will not excuse the misrepresentation.
The test for what is material is stated in section 3105 the N.Y. Insurance Law and it says:
"No misrepresentation shall be deemed material unless knowledge by the insurer of the facts misrepresented would have led to a refusal by the insurer to make such contract."
More CommentsIF you are part of the majority that is truthful on your application you should be able to "bank on your policy", even if the indeterminable loss occurs within the contestable period.
When you apply for life insurance, you should carefully review the application BEFORE you sign the application. The application becomes part of the contract and is usually attached thereto, at the back. When you receive your annuity contract from your agent or the company, you should look over the application AGAIN and make sure that your application (that is now part of the contract) is completely truthful and accurately recorded.
What happens if death occurs while after a prepaid life insurance application is pending
A contestability review will be part of the claim review for any claims submitted in the contestability period. The contestability period is two years from policy issue in the majority of states and one year in others. Again it begins as soon as a policy goes into effect. The life insurance company is within its rights to investigate the application and the information submitted for material misstatements. One big example could be if a life insurance applicant has lied about smoking status. There is legal precedent for rescission of a life insurance contract over misstatement of smoking status after presentment of a life insurance claim. [ see Montgomery v Fidelity & Guaranty Life Ins Co , 269 Mich App 126 (2006), where the insured did not disclose his smoking habit on life insurance policy application, although he died in a car accident. The court held that the material misrepresentation warranted rescission of the policy by the insurer