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What Happens If I Lie on My Life Insurance Application? | Quotacy Q&A Fridays


Welcome to Quotacy’s Q&A Friday where we answer your life insurance questions. Quotacy is an online life insurance broker where you can get life insurance on your terms. I’m Jeanna and I’m Natasha. Today’s question is: what happens if I lie on my life insurance application? If you lie on your life insurance application, three things can happen. Your application may be denied. Your premiums may be increased. Or your beneficiary’s death benefit may be reduced or denied. Let’s go over some examples of each scenario. When you apply for life insurance, you sign a form giving the life insurance company permission to check certain records of yours such as medical records, a criminal background check, credit reports and driving records. In addition to this, the company also checks the Medical Information Bureau. We’ll explain what this is shortly. Let’s say, for example, you previously applied for life insurance at an insurance company and admitted that you had three speeding tickets. The speeding tickets increased your risk to the insurance company and they ended up offering you premiums much higher than you anticipated. So you decide to walk away and apply elsewhere but this time you don’t admit to your speeding tickets on the new application. The new life insurance company not only sees on your driving record that you have these speeding tickets but they also find out through the Medical Information Bureau that you previously applied for life insurance and that you admitted to the speeding tickets. The insurance company will ask you about these inconsistencies and then investigate further. They can deny you a policy if you purposely omitted the information in an attempt to trick them. Instead of denying you coverage, the insurance company can also opt to increase your premiums if you misrepresent yourself on your application. For example, let’s say you fudge your weight by about 20 pounds hoping to get cheaper life insurance. During your life insurance medical exam, however, the truth comes out. The insurance company in this case often just increases your price to what it should have originally been. Another scenario is that the insurance company doesn’t discover the lie until your death. Depending on the situation the insurance company can reduce your beneficiary’s death benefit amount or deny it altogether. Every life insurance policy comes with a contestability clause. This clause gives the insurance company the right to investigate your death if you die within two years of buying the policy. Let’s say, for example, you apply for life insurance and omit the fact that you smoke cigarettes. You started smoking only a few years ago so your most recent medical records don’t report that you smoke. A year later after buying the life insurance policy you die in a car crash. The autopsy report shows that you’ve been smoking for many years. The insurance company investigates and discovers you were in fact a cigarette smoker even when you applied for life insurance. When your beneficiaries make a claim for the death benefit in most cases the insurance company would reduce the death benefit to whatever amount the premiums could buy you as a smoker policy versus the non-smoker one you were approved for. The insurance company would also have the option to go to court and rescind the policy as if it never existed. In this case, the beneficiaries would receive a refund of the premiums paid but no death benefit. It’s important to note that a contestability period only lasts two years. After two years the insurance company no longer has the right to dispute the validity of the insurance policy. The purpose of limiting this time is to protect beneficiaries from the omissions or mistakes made by the applicant. The only situations typically excluded from this two-year statute of limitations are: if it is discovered that the applicant did not have insurable interest on the insured, if the life insurance medical exam was taken by someone other than the proposed insured, and if the policy was obtained with the intent to murder the insured. Lying on your application for a chance at a lower premium simply isn’t a wise decision. It puts your beneficiaries at unnecessary risk and your beneficiaries are the whole reason for buying life insurance in the first place. Thanks for watching. If you have any questions about life insurance, make sure to leave us a comment. And if you have any questions regarding today’s topic, check out the blog link posted below. And if you’re ready to get quotes, check out Quotacy.com. We’re here to help you find the best deal on the life insurance you want. Bye! Thanks for sticking around. We’d appreciate it if you Liked the video and hit that fancy little Subscribe button to see us every week. Bye!


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