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The lowest possible life insurance rates go to those in good health, near their target weight, don't drink excessively and haven't used tobacco products in the past year. Lying on your application can negatively impact your insurance coverage. Say you claim you've never smoked and then you die and your doctor announces he'd been telling you to stop smoking for years; a life insurance company can refuse to pay full benefits. Granted, this means they have to actively prove you were smoking at the time you applied for insurance, but they can do it.
When you apply for insurance, they require a urine sample. This sample is tested for drugs, nicotine, proteins and more. They use this information to make sure you do not have diabetes, regularly use drugs, or smoke. Nicotine found in a non-smoker's urine could show that the applicant is being deceitful. Insurance companies look for this.
If caught, rarely will they decline your application. Instead, they simply give you the smoker's rate, which can be three times higher than a non-smoker's. While it is tempting to lie, it can be costly in the long run. If they don't catch your lie, you could still be at risk. Should you die from some event or illness, your family's financial standing could be threatened if you lied on your application. It's not worth the risk.
Life insurance policies carry a two-year clause known as an "incontestable clause." If you die within two years of starting your policy for some reason or another and it comes out that you were smoking, they are legally entitled to refuse to pay any benefits. If two years or more years have passed, they do look at cause of death. If the cause is something smoking related, the company can take a closer look to determine that you were not smoking. If caught, they can reduce the amount of money your beneficiary receives.
Few adults take up smoking in their adult years. This is why insurance companies are so strict about making sure you are not lying on your policy. You can try to argue that you started smoking late in life, but statistically this is rarely the case.
Most companies state that after ten years, they no longer bother to argue claims. With term life policies, this is even more common because many policies expire after ten or twenty years. When you go to renew your policy, a new health exam will be issued. This includes new urine tests to check
for drugs and nicotine.