Question: How can an insurance company really tell if I smoke?
Answer :
You will be charged a higher premium for your life insurance policy if you smoke. For this reason, life insurance companies have devised a variety of methods to detect tobacco use among their applicants. They start by simply asking you on the life insurance application if you smoke.

But the application is not the only source available to evaluate your risk potential. You may be required to submit to a physical exam by an independent medical practitioner, and blood and urine tests are often mandatory, the results of which may indicate that you smoke. If you're applying for a large amount of life insurance, some companies conduct in-depth investigations into your background and medical history, interviewing friends and family members. Most companies will obtain health data from the Medical Information Bureau, a source of centralized information on individuals who have applied for life insurance, to see if you ever indicated on a prior application that you smoked.

If you do smoke, you may be tempted to make false or incomplete statements on your application to ensure acceptance or lower premiums. Don't be dishonest about your smoking habit. Since a life insurance policy is a legal contract, lying on your application for insurance could be considered fraud. If a company finds out later that you lied about your smoking, it may have a legal basis to terminate your life insurance coverage. Or, the company can refuse to pay a claim by your beneficiary if it can prove that you lied about your smoking at the time you bought your policy. Life insurance policies are subject to a contestability period of two years, during which time the company may cancel the contract if you made any false statements on your application. But if fraud is determined, the contestability period is indefinite.