Lying on insurance applications is penny-pinching gone too far, where the desire to save a few extra dollars comes at the expense of one’s honesty. This isn’t just a bad idea from a moral standpoint but also because insurers can detect false statements on life insurance applications.
Why Lie On a Life Insurance Application?
People often lie on life insurance applications because:
- It enables them to get lower premiums
- They can obtain a greater death benefit
- A combination of the above
How Can Someone Lie On An Application?
There are two ways to lie on an application – omitting the truth and deliberate false statements.
Omissions happen with questions revolving around medical history, whether it be the applicant’s or the applicant’s family members. For example, someone may report that they have asthma but fail to include a cancer diagnosis. This is also true for neglecting to mention that other family members have battled (or are battling) a certain form of cancer or another disease. Other examples where omissions occur include dangerous hobbies, travel to dangerous areas (such as war zones), drug abuse, and mental health conditions.
False statements may also be made by claiming to be younger, reporting a lower body weight, lying about occupation and income level, and claiming to be a non-smoker when the individual smokes regularly.
How Do Insurers Find Out if Someone Has Lied?
There is a two-year period known as the contestability period. This begins immediately after the application is submitted, and insurers can look for discrepancies. Insurers utilize the MIB to access a database containing previous applications for other forms of insurance. Insurers can also look through medical records and interview the individual’s family and friends.
What Happens If I’m Caught?
Consequences vary. If you made an honest mistake (e.g., forgetting to mention a medication you took several years ago), there may be no repercussions. In other cases, your policy may be denied or canceled, or your beneficiaries may only receive a portion of the death benefit (or nothing at all). At worst, you’ll be denied from every future life insurance policy you apply for.
Criminal charges are unlikely. While lying on an application can be viewed as insurance fraud, it’s not the same as what people are commonly jailed for. For example, if you set your home on fire to get an insurance payout, that would lead to criminal charges. Lying on an application may be dishonest, but that alone isn’t enough to land you in a courtroom.
Get Quality Insurance Through All Things Insurance
At All Things Insurance, we will get you the most affordable life insurance policy regardless of your situation. We also offer life insurance policies where you won’t have to answer any medical questions, so you don’t have to worry about your age or health being held against you in any way. We conduct honest business to your highest satisfaction. Call us at (763) 645-5450 to learn more about your life insurance options.