What Happens If You Lie On Life Insurance Application?
When applying for life insurance, a person may have a number of reasons for not being totally honest. However, in most cases, the reasons come down to cost and coverage concerns.
For example, they want to pay a lesser premium or they are concerned that they won't be covered if they divulge specific facts, such as medical conditions or the fact that they smoke cigarettes. Other examples include alcoholism and drug addiction.
However, telling a lie to life insurance might cost you a significant amount of money. If the insurance company learns that you lied on your application, they have the right to refuse to pay out any claims.
If an insurer discovers that you have submitted incorrect information, it has the right to not only deny your application but also terminate your coverage.
Why do some people lie on their applications for life insurance?
It's not as often as you would imagine people lying on their applications for life insurance. 14.7% of respondents in the United States acknowledged providing false information on an insurance application.
The question, therefore, becomes: why do individuals mislead on applications for life insurance? The state of one's health is commonly used as a justification for lying. For instance, someone may tell an insurance company about their smoking history in order to get a cheaper premium on their health insurance.
Since they are taking on greater risk when they insure someone who engages in unhealthy behavior, life insurers typically charge higher premiums to tobacco users. It's also possible for someone to lie about a parent having heart disease or cancer
Among the other lies that might get you into problems with life insurance are the following:
● Creating a false impression of your financial situation in order to get a larger payout
● Being dishonest about drug usage
● Fabricating a conviction for driving under the influence of alcohol
● Keeping one's depression diagnosis a secret from one's loved ones
● Keeping a major sickness from being disclosed in the past
Repercussions for providing false information
If you provide false information on a life insurance application, you might face a variety of possible repercussions. They might be from very small to catastrophic ones. They are as follows:
● Being requested by the insurance company to make changes to the portion of the application that is being questioned and scrutinized
● Having the application turned down as unacceptable
● Being subjected to more expensive insurance rates
● Having the insurance coverage terminated
● A claim that ultimately results in compensation that is less than anticipated