Before purchasing a life insurance policy, you will need to fill out a lengthy application with the insurance company. This application will cover many different aspects of your life, including your health, your finances and career, and your criminal history, just to name a few things. The life insurance company will use this information to determine how much of a risk you pose to them as a customer. The more likely you are to pass away, the riskier you are to the insurance company, as they are more likely to have to pay out a large death benefit. It may be tempting to lie on your life insurance application to paint yourself in a better light. However, it’s always important to be truthful. If you are caught lying on a life insurance application, it could have serious consequences. Here’s what happens when you lie on a life insurance application.
Lowered Death Benefits
Lying on your life insurance application could have consequences not only for you but for your family as well. If you die and your insurance company discovers that you lied or failed to disclose something on your application, they could lower the death benefit that they pay out to your family. They also could opt to deny the death benefit altogether in the worst cases.
Higher Life Insurance Premiums
There are also serious financial consequences for lying on your life insurance application. If you get caught lying, life insurance companies will charge you much higher premiums even if you are healthy. They may also use this as a reason to deny you coverage altogether or revoke your policy if you already have one. This could have serious financial consequences for your family because they won’t have a life insurance payout to cover the cost of your funeral or pay off your debts in your absence.
How Life Insurance Companies Catch Fraudsters
insurance companies are always on the lookout for instances of fraud, and lying on your application is one of the most common types of insurance fraud. People often lie about their health status, including their family history of chronic diseases, their use of tobacco and alcohol, and other health factors that could potentially reflect poorly on them. At the time, this may seem like a little white lie that could save you money. However, the consequences are far too serious to take the risk. You may wonder how insurance companies catch this type of fraud. There are a few different strategies they have to search for instances of this type of fraud. These include:
- Medical Examinations. When you apply for life insurance, you will start by filling out an application, which contains an extensive questionnaire about your medical history and health-related behaviors, such as smoking, drinking, and exercise. However, after filling out the application, you will have to take a medical examination as well. The insurance company will send someone to your home, and they will do a blood and urine sample, test your pulse, and measure your height and weight. They will also go over all of the questions in your application again, and they will ask about the physicians you are currently seeing. Since these exams are so thorough, there is a good chance that they will detect any information you have lied about in your initial questionnaire.
If you were unaware that the information you initially provided was false, this is not considered fraud. For example, many people are unaware of their exact height and weight. However, if you say you don’t smoke, but your examination indicates that you have many characteristics of a smoker, this is considered fraud.
- The Medical Information Bureau. Also known as the MIB, this organization keeps a database of health records that life insurance companies can access. there are many things you might have lied about on your life insurance application that would not show up in your medical examination. Life insurance companies can cross-reference your application with the MIB be to determine if you have lied about your health or any other information on your application.
Final Word on Lying on Your Life Insurance Application
The bottom line is that you should never lie on your life insurance application.
If you are worried about being denied life insurance coverage because of your health, the best bet is to talk to an independent life insurance agent. There are insurance companies that offer policies for people who aren’t in perfect health or that don’t require a medical examination. However, it will take some shopping around to find the most affordable policy given your circumstances. Be sure to let insurance companies know that you are shopping around. They are always looking for new business, and they may be willing to offer discounts to new customers.
If you aren’t in great health, make sure you are taking steps to remedy the problem. Even if you have a chronic condition, insurance companies will be more forgiving if you don’t smoke, drink, or engage in other risky behaviors, and if you see the doctor on a regular basis.