What Happens If You Lie On A Life Insurance?
Updated On May 11, 2021
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Life insurance premiums are often based on the age and health conditions of the applicant. It has been seen people lie about pre-existing health conditions, adverse habits like smoking, etc., to get more benefits out of their life insurance plan. However, this is extremely wrong and the person will be held accountable as a fraud when caught.
Honest mistakes on a life insurance application are never considered a lie. It might happen that you make mistakes while writing a date or a name or anything similar. The best solution is to own up to it and ask the officials handling your application to make the rectifications. Do not try to be sneaky about it as there might be serious repercussions if you cannot make up a viable reason later.
Will the Lies on a Life Insurance Application Get Caught?
Yes, they are mostly caught. Life insurance companies are well aware of the fact that many people lie in their life insurance applications. They also know which the most common lies to be made up are. All applications go through a thorough vetting process before they are issued.
Besides, you have to submit many documents along with your application. Each of these applications is carefully reviewed. So, it is very likely your lie will be caught at this stage. Your medical test results, motor vehicle history, and a lot more will be evaluated so it is nearly impossible to get away with a lie.
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Insurance companies also refer to the Medical Information Bureau (MIB) while evaluating applications. This database stores the information of all individuals who have lied on their insurance applications before. Even if you do not have your name there, your information will be uploaded if caught lying. This will make it difficult for you to get insurance later.
What are the Consequences of Lying on a Life Insurance Application?
Undoubtedly, there are consequences for all lies in a life insurance application. However, depending on the severity of your lie, it may differ. If the lie is extremely severe, the company can decline to cover the plan for you. Additionally, your information will be updated to the Medical Information Bureau database.
Contrary to popular belief, you will not be jailed for this. If it is a relatively insignificant lie, the company may charge you a higher rate than what you initially would have to give. Either way, it is disadvantageous and you should avoid it at all costs.
What if the Lie is discovered After Issuance?
On the off chance that a fraudulent application does go through, there are still chances of it getting discovered somewhere down the line. There is a contestability period for all life insurance policies and companies. In case you require the amount during this period, the application may get reviewed again. If the lies are discovered then, the company has the right to withdraw coverage and provide no death benefit.
The long and short of it is that you must never lie on your life insurance application. There are hardly any benefits in doing it. Instead, you may get penalties that may disqualify you from ever getting another life insurance. Be transparent with your information to get the best benefits out of your plan.
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.