Smoker lies causing life insurance prices to rise, AA says

Up to 40 per cent of smokers with life insurance do not admit to the habit when applying or renewing health insurance and their propensity to lie costs non-smokers money, figures from AA Life Insurance suggest.

The AA analysis of life insurance applicants countrywide shows that there are more smokers than there are people who admit to smoking on their policies applications or renewals.

According to data from the Health Service Executive (HSE), the overall prevalence of cigarette smoking in Ireland last year was 19.1 per cent. That number is inconsistent with data which says that the average smoker population among life insurance applicants is only 12 percent.

"The real number of people who misrepresent their smoking habits on their Life Insurance policy is probably lower than the figure illustrated," said the AA's director of consumer affairs Conor Faughnan. "Smoking rates are highest among young adults and people in lower socioeconomic groups parties who are unlikely to have or need Life Insurance at that stage in their life.

“This could skew the figures slightly, but given the sizeable gap between actual smokers and those who admit they smoke in their policies it is hard to believe that there is not some misrepresentation going on.”

Heavy price

Smokers pay a heavy price for their habit when it comes to life Insurance with their policies costing an average of 92 per cent more to offset additional healthcare and other related costs.

But according to Mr Faughnan, when misrepresentation occurs non-smokers end up paying more than they should.

“When taking out a Life Insurance policy, applicants can be asked whether they had a cigarette over the last 12 months, which can be tempting to lie about if you consider yourself a “social” smoker. There’s a presumption that the impact on your policy will be next to nothing. But a “white lie” like that has a significant impact on a claim payment,” Mr Faughnan said.

“If you non-disclose smoking and subsequently make a claim - regardless if it is related to smoking - an insurer can reduce the amount they pay, or decline it altogether. It really is not in a customer’s interests to non-disclose information as it truly has a negative impact on the outcome of the claim - at a time when the customer needs it most.”