life insurance HEALTH STATEMENT

My life insurance lapsed - and a new signed medical health statement is required - am I screwed if I lie? I've had a $400,000 life insurance policy for about ten years or so. Recently the policy lapsed, due to a bank checking account change / automatic draw situation. The company, Liberty Mutual, says I can reinstate the policy and bring it up to date with the past due payment, but I need to fax them a "Health Statement." The statements asks: Since the date of the application of the above policy: "Have you had any illness or injury?" and "Have you consulted any physician or surgeon?" The problem is, about two years ago I was diagnosed with Type II diabetes. I called my local (Friendly) representative for the company, who sold me the policy years ago, and he says just lie, and say that my health is fine. He also advised me to lie way back then, and say that I've never smoked pot, which I did, and continue to do occasionally. (Marijuana is the only thing that calms my leg shakes and neuopathy in my feet.) I'm 52 years old, fit, and doing my best to treat my diabetes. I've never smoked tabacco and I've never drank alchohol. My question is: If I lie, and say "No" to these questions, is my estate and my loved ones listed as beneficiaries screwed when I die? Will my death certificate probably list my death as due to complications of diabetes, and thusly nullify the life insurance? Will the Life insurance company get a copy of my health records after I die, and see that I was diagnosed? Even if I die of a heart attack, or stroke, will the diabetes come into question, along with this new Health Statement? I'm sure that if I applied for a new policy, with the diabetes, my premiums would be impossible to afford. What should I do? Any insurance industry folks out there, what to share the inside pitch? Please?