Now I find out that my life insurance company wants to give me a physical which will include tests for nicotine (both blood and urine). I have not smoked today and don't plan to smoke anymore, but my appointment for the physical examination is in a week.
Will they be able to tell that I have smoked recently?
Yes, the testing for nicotine performed on behalf of the life insurance company should be able to tell that you do have nicotine in your system. You may want to explain your situation to the insurance company; however, if you lied about smoking on your application, they may decline you for coverage, or just charge you a higher rate based on being a smoker.
Here's an article that reviews life insurance nicotine testing and how it works to help you learn more.