QUESTION: My husband is a smoker. However, on his life insurance application, he was asked if he was a smoker and he did not answer affirmatively. I am afraid that this is not only lying but also stealing. Is that correct?
ANSWER: I am afraid that you are correct. Lying that can cause financial damage is also considered stealing (see for example, Rav Moshe Feinstein ZT”L in his Igros Moshe C.M. Vol. II Siman 29 and Rav Shlomo Zalman Auerbach ZT”L in his Minchas Shlomo Vol. II #97).
Your spouse is unfortunately not alone in this regard. A survey conducted in 2020 showed that 14.7% of American adults admitted to lying on an insurance application. Your spouse is no doubt an upstanding member of society, so the question is, how can upstanding individuals rationalize such behavior?
The answer is that such individuals often say to themselves, “I believe that I am not going to get lung cancer and die. In fact, the odds are that I will not. Therefore, it is not considered stealing as the life insurance company will not have to pay my claim based on my lie.” The problem with this type of thinking is that the insurance companies stay profitable by their actuarial tables which tell them under what circumstances to extend life insurance to an applicant. The actuarial tables tell them to extend life insurance to an applicant at a higher rate if they are a smoker. Therefore, if you are a smoker, the insurance company does not wish to sell you insurance for the rates that are offered to non-smokers. If you lie on your application, you will be taking insurance from the company under a false pretense and will be taking coverage at a rate that they do not wish to offer to you. This is theft.
In addition, when people lie on their application about whether they smoke, it damages the predictive quality of the above referenced actuarial tables and causes the life insurance company to be less profitable. This causes the insurance company to raise its rates on everyone - all because of those that were dishonest. It’s really not the case that lying to an insurance company is a victimless crime. As described above, the few that are dishonest, cause everyone’s rates to increase.
The Chofetz Chaim writes (Sfas Tamim Chapter 3) that one who lies – ends up losing his Kosher money (the money that he made honestly) as well. On a related note, it is important to know that if the insurance company catches someone lying on their application it can affect other insurance policies that they apply for, as insurance companies keep and share records of people who lie on their applications. Such people are often blacklisted and their past, dishonest applications can affect their future applications.
