Many people are tempted to lie when filling out a life insurance application to increase the likelihood of getting approved and getting a lower premium. The majority of these lies tend to fall into the category of the sins of omission, basically failing to disclose vital information that leads to a negative outcome. The bottom line when it comes to applying for coverage, be truthful on your life insurance application. Your benefits depend on it.
Common Lies Disclosed on Life Insurance Applications
By omitting information on your life insurance policy, you are in fact lying and putting yourself at risk of getting a less favorable result. Some of the most common lies include denying use of tobacco or drugs, suffering from some degree of depression, having been arrested and convicted for several DUI charges, claiming less moving violations that convicted of, cancer history of the applicant and extended family history, traveling to dangerous locations, and overstating income for sake of getting higher coverage. The applicant simply feels being honest in these instances will lead to higher premiums or even the application being declined.
Utilizing the Medical Information Bureau Reports
Lying on life insurance applications is a risk many people take in the hopes that the insurance company will simply overlook the answers. If the insurance company suspects that you may not have been truthful on the entire application, they can utilize the Medical Information Bureau reports to shed some light on your real state of health. There are also other third-party databases the insurance company has access to that will allow them to find missing or misleading information on the application. The insurance company can order a medical exam before accepting the policy. A third-party medical team will come to your home and check your height, weight, take urine samples, blood samples, and test your blood pressure. They also have access to your motor vehicle reports to confirm your driving history.
Consequences of Lying on Life Insurance Application
Although many of these lies that are put on the life insurance application come under the category of "so everyone does it", or "whoops I made a mistake", the bottom line is they come with real consequences. Once the insurance company uncovers the truth, they will charge you higher premiums that you tried avoiding. If the insurance company suspects you were lying, now they go over the entire application much closer and could choose to decline you. The worst case scenario is that you pass away and after your death they uncover the lie and either reduce or cancel the entire death benefit. This would be devastating to your family and could cause them financial hardship they may never recover from.
Remember that your insurance company by law has a two-year contestability period from the time of the application to your death, where they are allowed to contest the benefit payments. If there is fraud uncovered in the application, the insurance company can and will stop any death benefit payment. Depending on the specific laws in your state, they might be able to contest your payments longer than two years. When you are filling out your life insurance application, be sure to be as truthful as possible to avoid this scenario playing out in your life.