What happens if I lie on my term life insurance application?
Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states.
After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in…
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Written by
Rachael Brennan
Licensed Insurance Agent
Benjamin Carr was a licensed insurance agent in Georgia and has two years’ experience in life, health, property and casualty coverage. He has worked with State Farm and other risk management firms. He is also a strategic writer and editor with a background in branding, marketing, and quality assurance. He has been in military newsrooms — literally on the frontline of journalism.
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Reviewed by
Benji Carr
Former Licensed Life Insurance Agent
UPDATED: May 27, 2022
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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 happens if you lie on a life insurance application? 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.
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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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.
