The price of your life insurance policy often depends on your answers to a range of application questions, plus the results of your life insurance exam and personal medical records. Some applicants succumb to the temptation to lie on their applications, hoping their misrepresentations will sneak through the approval process and garner them lower rates. If a life insurance company finds out a person lied about past information and then dies due to a related cause, there are two outcomes: The company could alter the death benefit to be equal to the amount the person would have gotten with a rated policy, or the company could rescind the entire policy. An insurance companys range of remedies depends on specific state laws. Here are some of the most frequent lies discovered by life insurance companies in screening applications.
I dont use tobacco: The desire to get affordable life insurance drives many applicants to not only check the non-tobacco boxes on their applications but to also abstain for several weeks before their medical exams so that nicotine does not show up in their lab results. This lie pops up more than anything elseand some applicants lie unintentionally. Applicants who use nicotine in other forms, such as a patch or chewing tobacco, may not realize they are in the tobacco category. In their own minds they are not tobacco users, but in life insurance companies eyes they are.
Im not depressed: Neglecting to mention depression is common. Depression can be impossible to detect by an agent or the paramedical examiner who performs the medical review. However, any medical diagnosis of depression will be apparent in your medical records.
Ive only had that one DUI: Lying about drunken driving happens, but lies about the second, third, or fourth offense are the most common. The also applies to traffic or moving violations such as speeding.
Theres no cancer in my family: An applicants own history of canceralong with cancer among immediate family memberswill result in a higher life insurance costs, increasing the temptation to fudge. Any personal history of cancer is no doubt in your medical records, and so is family history.
I dont plan to travel anywhere dangerous: The number of applicants who misrepresent their travel plans has increased, especially as more parts of the world become dangerous. Applicants will sometimes adjust their plans, saying theyll be traveling in a dangerous land for only two weeks when in fact they plan to reside there for an extended period of time.
I make $100,000 a year fixing cars: Some people will lie about their income in order to receive more coverage than they are eligible for. A couple may claim that the husband is a self-employed mechanic making $100,000 a year and the wife is a self-employed housekeeper making $50,000 a year. When red flags go up in a case like this, insurers may pull a credit report or ask the applicant to fill out a financial supplement that details assets, liabilities, and other information.