What happens if I lie on my life insurance application?

What You Should Know:

• Lying on a life insurance application is never a good idea as it can lead to lowered benefits or even being declined a policy
• Misrepresentations are reported and tracked, so any future life insurance application might be affected as well
• If you pass away and your insurance company determines that there was false information on your application, your claim could be denied, leaving your beneficiaries without a death benefit

Life insurance rates are calculated based on your age, medical history, and lifestyle, so having a pre-existing medical condition or getting to an older age will considerably increase your premium. If you’re facing this issue, you might be wondering what would happen if you misrepresented the truth on a life insurance application. This article will explore the consequences of lying on a life insurance application and how insurance companies verify the information you provide to them.

Are you searching for life insurance quotes and unsure of where to start? Just enter your ZIP code into our free quote tool today to start comparison shopping.

Lying On A Life Insurance Application

What is life insurance fraud? Omitting information or slightly twisting the truth to get a better insurance rate might seem like a harmless thing to do. The most common questions people lie about on a life insurance application are their age, weight, tobacco and drug use, as well as their medical or mental health history. 

Pre-existing health conditions such as cancer, diabetes, or high blood pressure will increase the insurance rate compared to someone in good health. Age is another factor, as younger people will have cheaper policies than older applicants. Some lifestyle choices can also affect the insurance rate, such as your occupation, practicing extreme sports, traveling to war zones, etc.

However, lying on your life insurance application can have serious consequences and is never a good solution to avoid a higher rate. Instead, shop around to find the most affordable life insurance policy that will still offer you the coverage you need.

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How is my life insurance application verified?

After you submit your life insurance application, the insurance company begins the verification process. The agent will first assess the findings from a health questionnaire you filled out and your medical records. They might even conduct personal interviews with your friends and relatives.

Your insurance company might require you to take a paramedical exam where your height and weight will be recorded, blood pressure measured, and blood and urine tested for basic health parameters. The insurance company will also run a check through a database maintained by the consumer reporting agency, Medical Information Bureau (MIB), to find out any relevant health information. They can also check your driving records for violations. For further clarification, consider our guide on the importance of medical records and the role of MIB in life insurance.

If there are discrepancies between the information you provided and the insurance agency’s findings, you could be rejected for the life insurance policy. In addition, most term life policies have a two-year contestability period during which the insurance company can decrease your benefit or cancel your policy if they determine that you omitted information or lied about relevant data.

Consequences Of Lying On Your Life Insurance Application

Lying on a life insurance application can be treated as insurance fraud, with serious consequences to follow. The outcome will depend on the importance of the concealed information and could range from reduced payout to policy cancellation and future uninsurability.

If your insurance company determines that you lied on a life insurance application, they will report the incident to MIB so that it will show up on any future insurance applications. This means you will likely pay a higher insurance rate in the future or might have a hard time finding an insurance company that would agree to offer you a policy. If the misrepresented information is relatively harmless, your insurance company might only request that you revise that section of the application.

If you pass away during the contestability period of two years and your insurance company discovers false statements in your application, your claim will most likely be denied. As a result, your beneficiaries would not receive your death benefit. There are multiple reasons why a life insurance provider may not pay out a claim. If the claim is filed after the contestability period is over and the insurance company can prove the alleged fraud, they can sue your beneficiaries for damages. 

Read more: How to File a Life Insurance Claim

Honest Mistakes Do Occur On Life Insurance Applications 

Mistakes happen to everyone and life insurance applications are no exception. If you genuinely forgot relevant information or made an unintentional mistake in quoting information from your past, you shouldn’t be in trouble. In most cases, your insurance company will allow you to correct the information in question without other consequences taking place. Having your medical records at hand when applying will help avoid such mistakes. If you do notice them at a later date, notify your insurance company so that the information can be altered. 

If your circumstances change after you’ve purchased term life insurance, this shouldn’t affect your policy. The policy takes into account your information and lifestyle choices at the time of the application and is not affected by any later changes that might happen in your life.

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Case Studies: Consequences of Lying on Life Insurance Applications

Case Study 1: The Case of John Doe and Trustworthy Insurers

John Doe applied for a life insurance policy with Trustworthy Insurers, a reputable insurance company known for its stringent underwriting process. John, seeking a lower premium, provided inaccurate information about his smoking habits, claiming he was a non-smoker.

However, following his untimely demise, an investigation revealed that he was a regular smoker. As a result, Trustworthy Insurers denied the claim and canceled the policy, leaving John’s family without the financial support they had expected.

Case Study 2: The Case of Sarah Adams and SecureLife Insurance

Sarah Adams applied for a life insurance policy with SecureLife Insurance, a well-established company known for its comprehensive coverage options. In her application, Sarah omitted disclosing a pre-existing medical condition she had been diagnosed with a few years prior.

Unfortunately, Sarah passed away due to complications related to her undisclosed condition. SecureLife Insurance discovered the omission during the claim investigation and denied the claim, leaving Sarah’s beneficiaries without the intended financial protection.

Case Study 3: The Case of Robert Johnson and Reliable Assurance

Robert Johnson sought life insurance coverage from Reliable Assurance, a reputable insurer with a strong track record of fair claim settlements. During the application process, Robert misrepresented his income, inflating it to qualify for a higher coverage amount. Tragically, Robert passed away unexpectedly, and his beneficiaries filed a claim.

However, during the investigation, Reliable Assurance discovered the false income information. As a result, the insurer denied the claim, leaving Robert’s loved ones in a difficult financial situation.

Case  Study 4: The Case of Emily Roberts and SafeGuard Insurance

Emily Roberts applied for life insurance with SafeGuard Insurance, a trusted provider offering competitive policies. In her application, Emily failed to disclose her risky hobbies, specifically her involvement in extreme sports. Unfortunately, Emily suffered a fatal accident while participating in one of these activities.

SafeGuard Insurance, during the claims process, discovered the undisclosed information and denied the claim, citing the material misrepresentation made by Emily.

Case Study 5: The Case of Michael Brown and Assurance Plus

Michael Brown applied for life insurance coverage with Assurance Plus, a renowned insurer known for its excellent customer service. Wanting to secure a lower premium, Michael provided false information about his travel history, failing to disclose recent visits to high-risk destinations.

Tragically, Michael contracted a severe illness while abroad and passed away. Assurance Plus, upon investigation, found the concealed travel information and denied the claim, leaving Michael’s beneficiaries without the expected financial support.

The Bottom Line On Lying On A Life Insurance Application

Omitting information or straight-up lying on a term life insurance policy is never a good idea. You might reduce your rate temporarily, but the consequences of your dishonesty can cost you much more. Be truthful about your circumstances when applying for life insurance and save on your insurance rate by shopping around for the best deal available. Start your search for affordable life insurance today and browse multiple companies by entering your ZIP code into our free quote tool below.

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