If you resume smoking two years after you buy an ordinary life insurance policy on a non-smoking basis, are you supposed to inform the insurance company. Is the policy still valid? From my understanding if at the time of getting the policy you answer truthfully and validate the answers anything that happens afterwards is irrelevant.
You say 'resume' smoking, but I'm assuming you mean 'start' smoking, because if you're a previous smoker, you probably wouldn't have got non-smoker rates when you took out the policy (depending on how long ago you stopped...). Anyway, you're right, you don't have to tell the life insurance company. Bit bizarre, in my opinion, because if you have a GI policy (eg car, home), you DO have to tell the company of any change in risk (eg new car). Wonder why the difference?
I think the difference is due to the fact that the GI policy is an annual contract. At the end of each year the client can cancel and go elsewhere. Similarly the insurer can decline to renew or impose revised terms - that is why disclosure of new material facts is required. However, life and pensions is long term business - disclosure of material facts is only required at the outset. Of course, if a client takes out a term assurance with insurer X, he could cancel that at any time during the term. However, if he then took out a new policy with insurer Y, he would then have to disclose material facts at that time to Y. In any event the premium would probably be higher due to his increased age.
Taking up smoking is no different from anything else that happens to you while insured. You wouldn't inform them if you put on a bit of weight, stopped going to the gym, or got diabetes. In addition, I'd imagine the inception rates of new smokers in the insured population is negligible, so it's not a selection issue.
You are only obliged to say anything that you are requested to in terms and conditions and I don't think I've seen anything on this with any company. There are clearly defined rules on what constitutes smoking though at contact inception including a specified time for which you haven't smoked if you once did. Medical tests are quite clever but how exactly timescales can be proven is a very interesting topic.
