If you smoke and you lie about it on your life insurance policy, you could face serious consequences. Lying on a life insurance policy could be grounds for the insurance company to cancel the policy. Lying also constitutes fraud, and the insurance company may investigate or prosecute.
Material Facts
Certain misstatements of facts are incidental to an insurance policy. For example, incorrectly writing down your phone number, your name, or your address would not cause your policy to be rescinded. However, lying about a material fact -- such as your health or any factor that is taken into consideration for the issuance of an insurance policy -- would be grounds for rescission.
Significance
You could lose your insurance coverage. This means the insurer will cancel your life insurance and you won't be covered when you die. If the insurance company discovers the lie after your death, the insurer will still cancel the contract and will not pay benefits to your beneficiary. The premiums that you paid will be refunded to your beneficiary if you're dead or to you if you're still alive.
Drawbacks
If an insurance company discovers that you lied about smoking on an application, you may find it difficult to obtain insurance from that company or other companies. Insurance companies often share information about applicants and ask whether you've even had a policy application denied in the past.
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