By Chris Walters, PolicyGenius Contributor
Are you a "non-identifying smoker"? That's what a recent UC San Diego report calls the one in 10 people who meet the technical criteria for a smoker, but who reject the term because they only smoke occasionally.
Or are you one of the millions of former smokers who now "vapes"? The e-cigarette industry is growing so fast that the FDA is currently in the process of deciding how to treat it with respect to other tobacco industry products.
The distinction is an important one if you're shopping for life insurance. Our brokerage has helped life insurance consumers in both segments -- and sometimes the insurers' smoking assessment policies aren't intuitive. It's important to understand how insurers see things, because otherwise you might end up paying a higher premium than necessary.
The Insurance Company's Point of View
When it comes to the insurer's treatment of e-cigarettes, a couple of factors suggest a more conservative view of their impact on health -- and therefore risk classification.
First, the FDA is in the process of deciding whether to treat e-cigarettes like traditional cigarettes. In the next few weeks, the agency will announce whether it classifies them as tobacco products (because they attract new nicotine users), or smoking cessation products (because they wean a person from tobacco use). If the FDA settles on the tobacco classification as widely expected, then e-cigarette users will technically still be considered smokers.
However, even if the FDA puts e-cigarettes in the smoking cessation category, your insurer might not care. Most insurers lump users of nicotine patches, nasal spray or gum with traditional tobacco users, according to Mike Woods, an insurance underwriter with Pinney Insurance Center.
"In order to qualify for non-smoker rates, the underwriting with most carriers is going to require you to be a full 12 months of no nicotine use at all," Woods says. "Since most of the smoking cessation products still contain some sort of nicotine delivery, that still qualifies for tobacco use rates."
What Happens if Your Insurer Determines You're a "Smoker" After All?
Insurers rely partly on the honor system when determining your classification, but that doesn't mean it's a good idea to withhold information. Here are some possible scenarios where an insurer might uncover past use:
1. You say you're not a smoker on the application, but the lab test suggests otherwise.
Even the occasional e-cigarette at a party can complicate things, depending on how recently it happened.
Insurers usually test for nicotine usage over the past three weeks at most. These tests don't return a positive result for second-hand or passive smoke, but they'll identify a one-time use if it happened within the testing window.
You might think you can abandon the application at this point and try again elsewhere. However, most insurers share application data to prevent this sort of underwriting manipulation, so there's a good chance your test results will follow you to the next insurer.
2. You say you're not a smoker, but during the first two years of the policy, the insurer finds evidence that suggests otherwise.
If you withhold information on past nicotine use -- even e-cigarettes -- during the application process, don't assume your history will remain buried once the policy goes into effect.
Evidence of past nicotine use can show up in medical records, public information searches, social media or even interviews with family or friends, Woods says.
If an insurer finds evidence of misrepresentation during the the first two years of the policy -- the period when an insurer can review and contest the policy terms -- then it can cancel the policy and return the premiums you've paid. And if you've had the bad luck to die during this period and the above happens, then your beneficiary could end up not receiving any benefit payment at all.
3. You say you're not a smoker, and at some point after the first two years of the policy, the insurer finds evidence that suggest otherwise.
Once the contestability period is over, most states won't let insurers cancel a policy. In these cases, the insurer will adjust the terms of the policy so that it matches what it would have originally sold you, had it known all the facts from the beginning. This means the death benefit amount will be reduced enough to make up for the higher premium that you should have been paying all along.
Translation: The amount of coverage you've purchased will suddenly shrink, and your premium might still go up anyway.
The Not-Quite-A-Smoker's Strategy for Buying Life Insurance
No matter what nicotine product you use, be truthful with your broker so she can help you find the insurer that best fits your current lifestyle. "One carrier we've found to be much more flexible is Prudential," Woods says. "Their underwriting will allow non-smoker consideration for smoking cessation products, including e-cigarettes, as long as there's been no 'regular' cigarette use in the past 12 months. For really infrequent cigarette smokers, Minnesota Life can also be a good option."
If you've recently stopped all nicotine use -- even e-cigarettes -- consider shopping again after 12 months have passed, or look for a policy now that can be modified once your classification changes.
Insurers may warm to e-cigarettes in the coming years, but for now most of them will still think of you as a smoker even if you don't. In today's world of semi-privacy, it might be harder than you think to hide evidence of this should an insurer decide to look more closely.
If you're either a current or former smoker who's shopped for life insurance, what's been your experience? We'd love to hear about it.