If a smoker fails to disclose smoking on a life insurance application, what is the consequence?

Failing to disclose smoking is a material misrepresentation on the application because smoking significantly affects mortality and premium rates. Within the contestability period (typically two years), the insurer can rescind the policy upon discovery, refund premiums, and deny any claim. After the contestability period, the policy is generally incontestable except for fraud (in states that recognize fraud as an exception). Even before the contestability period ends, if the misrepresentation is discovered during a claim investigation, the insurer can contest. Producers must ask the smoking question clearly and document the answer; applicants signing the application certify the truth of their answers. The same principle applies to other material undisclosed information — health conditions, drug use, dangerous hobbies.