Life Insurance Experiences

[JR McDuff]

Greeetings all, I was asked what happens when a pipe smoker passes away with a sizable life insurance policy that was written when they were a non-smoker? Are the beneficiaries penalized by receiving less of the payout? Can the insurance company even find out if the policy holder was a smoker? I wasn't sure how to answer this one. If any of you have ever heard of this happening I would appreciate your thoughts.
Thanks!

 

[Zack Miller]

A few issues. First and foremost, if the insured started smoking after the policy was in effect, there is no penalty.
Generally if an individual lies about any aspect on his initial application for insurance the policy can only be voided during a limited time after it was issued (about two or three years). After that the policy can not be voided.

It would be difficult for the insurance company to find out if the insured was a smoker after he died.

 

[anotherbob]

Greeetings all, I was asked what happens when a pipe smoker passes away with a sizable life insurance policy that was written when they were a non-smoker? Are the beneficiaries penalized by receiving less of the payout? Can the insurance company even find out if the policy holder was a smoker? I wasn't sure how to answer this one. If any of you have ever heard of this happening I would appreciate your thoughts.
Thanks!

I'd ask an expert. Not us. There are always so many in and outs when dealing with vultures.

 

[OverMountain]

Another question for the medical types, was smoking contributing to the death or did you get hit by a bus. Let us know what you find out.

 

[jguss]

Yes, you absolutely need to consult an expert, and of course carefully read the original policy. But having said that my experience tallies with what Zack said, allowing for potential variation in State law.

 

[Zack Miller]

What if Your Circumstances Change After Buying a Life Insurance Policy?​

Ordinarily, your policy will remain intact even if your circumstances change after buying life insurance. If, for instance, you take up a risky hobby like skydiving or start smoking cigarettes after purchasing the policy, your coverage shouldn't be affected. Why? Because the policy weighs your lifestyle factors at the time coverage is issued and not any subsequent lifestyle changes.

 

[bullet08]

I think life insurance isn't fair. Dead guy gets shit.

 

[jguss]

Dead guy gets shit.

All of us, when still alive, will cultivate the live man, and thus the dead will always have the worst of it

~ Archilochus

 

[kcghost]

Insurance companies are kind of strange. Some cases they look into but generally they don't. I expect that if it was for a large amount, they might a little excited.

 

[Zack Miller]

Life insurance is pretty straightforward. Once you’re dead, you’re dead and the payout amount is clear cut in the contract.

 

[Ilynelson]

When you apply for life insurance, the insurance company will typically ask you about your health habits, including whether or not you smoke or use tobacco products

 

[Coreios]

Sounds like you need a lawyer more than us.

 

[Coreios]

Generally though if you lied about being a smoker before you receive the policy then I think yeah that could actually void the contract.

 

[Ilynelson]

If you disclose that you're a smoker, you may be subject to higher premiums or be denied coverage altogether. If you lie about your smoking status and the insurance company finds out after you pass away, it could impact the payout to your beneficiaries. That being said, it's not always easy for the insurance company to determine if the policyholder was a smoker. I would also recommend checking out Health Coverage for Oregon Small Business for more related info and consultancy.

 

[Zack Miller]

As part of the insurance physical they may request a urine sample to test for cotinine, a metabolite of nicotine.

 

[alexishector]

Greeetings all, I was asked what happens when a pipe smoker passes away with a sizable life insurance policy that was written when they were a non-smoker? Are the beneficiaries penalized by receiving less of the payout? Can the insurance company even find out if the policy holder was a smoker? I wasn't sure how to answer this one. If any of you have ever heard of this happening I would appreciate your thoughts.
Thanks! it seems to make sense to purchase life insurance (recently married with a little one on the way and I am not getting any younger). I used a WCI recommended agent to purchase disability insurance earlier in my training and the agent was very helpful and straightforward. I feel like I have a disability insurance plan that works well for me. For those who have purchased life insurance, do you recommend going through an agent or trying to research/purchase via insurance companies directly? Similarly, should I wait to be an attending to purchase this Learn more(since I do not know what my future income might be)? My gut is saying no to that second question but wanted to see what the community experience was

it seems to make sense to purchase life insurance (recently married with a little one on the way and I am not getting any younger). I used a WCI recommended agent to purchase disability insurance earlier in my training and the agent was very helpful and straightforward. I feel like I have a disability insurance plan that works well for me. For those who have purchased life insurance, do you recommend going through an agent or trying to research/purchase via insurance companies directly? Similarly, should I wait to be an attending to purchase this (since I do not know what my future income might be)? My gut is saying no to that second question but wanted to see what the community experience was

 

[jbfrady]

I work in insurance and as a freelance writer I've spent the last year writing test prep questions for life and P&C exams, so I'll take a swing at this one.

Life insurance companies have to take particular precautions to make sure that there is insurable interest at the time of the contract. After that, it's all up in the air. The only real teeth arise when they can prove that the initial contract itself was fraudulent. Even then, however, a contract is a contract and it's tough for an insurer to wriggle out of it. It's no easy feat to enter litigation intending to withhold funds from a grieving family and expect to pull it off.

When Bruce Lee died, he had a rather sizeable life insurance policy that was only a couple years old. (After all, he died in his thirties.) However, it was found that he lied on his insurance application. Bruce Lee was an enormous pothead, which not many people know.

The insurance company learned of this and they tried to get out of the contract, claiming fraud. However, after much litigation, they had to pay out anyhow. It was their fault they entered into the contract and did not do their due diligence.

For this reason, the incontestability clause was developed. Insurance companies argue that there was no way that they could make a 100% airtight decision at that initial contact, so they are usually given up to two years to find anything that has gone awry with the initial app. Once that two years is over, the contract is as it is.

The only way there could be a real problem (in my opinion) is if the insurance policy was taken out with a shit company that wrote a contract chock full of exclusions. Even then however, the law still often sides with the defendant.

There's a fancy little thing called the Reasonable Expectations Doctrine which allows the law to hold the company to what the policyholder could reasonably expect, even if it isn't what the contract says. It's not reasonable to assume that you can't smoke a pipe after you begin a life insurance policy, especially when the only study ever released by the US government back in the sixties showed the cigar smokers and pipe smokers live longer than the average person.

While I can make no guarantees, I feel it quite reasonable to say this: if a lawyer gets involved and feels that there is no case at hand, find a different lawyer.