Why can’t I lie on a life insurance application?
For a variety of reasons, there are people who feel like bending the truth when applying for life insurance. There are times when I speak with people that tell little white lies. There are some that tell the biggest of lies. So why does this happen?
The majority of the time people are hoping for a couple of scenarios. One, is that bending the truth will improve their chances of their life insurance policy getting approved. The other is in hopes of getting approved at a lower premium. This usually occurs when applicants omit health or history information during the application process.
So, why can’t I lie on a life insurance application?
The simple answer is that the life insurance company that you apply with will find out what you’re trying to hide. Life insurance companies have several information resources available to them. They don’t just take the information that you provide the agent during the initial application. That is just the beginning.
3rd party verification resources: Past & Present
Once your application is submitted the underwriting process kicks off. You will probably have a medical exam after submitting the application. This will provide the insurance company information about your current health status based on height, weight, blood and urine samples. The life insurance company will also have access you your past health history from MIB reports.
MIB is known as the Medical Information Bureau. It is a huge database that all insurance companies will use in order to verify health histories. Think of it as a credit report of all your past medical events. If you happen to omit some health information on your application, it’s going to show up on the MIB report.
Your motor vehicle reports are also available to the life insurance companies. If you have had major violations or a DUI, they will have access to that information as well.
Major consequences for lying on your life insurance application
Bending the truth on something like a life insurance application may appear to be not that big of a deal. However, it can have major consequences in your quest for life insurance coverage. Over the years, I’ve encountered the following scenarios when the insurance companies uncovered omitted information.
Higher Premiums. It’s time to make the official offer once the insurance company finds all of the applicant’s information and the underwriting is completed. The company may approve the policy, but at a higher rate than you applied for.
Declined. The life insurance company may even decline your application entirely. If you omitted significant information or the application contains several occurrences of lies, you may get declined. If you are declined from a life insurance company, it may become even more difficult to find affordable life insurance moving forward.
Cancellation or Reduction of death benefit. If the life insurance company finds out that you’ve lied after your death they may reduce or cancel your death benefit. This is your worst outcome. There’s a two year contestability clause in life insurance that occurs from the time of your application until your death. This is the time that the insurance company may contest their payment of your benefit. Now depending on your state’s laws, the insurance company may possibly avoid paying even after 2 years. This is due to fraud. They may prove fraudulent if your death was due to conditions that were known to exist during the time of your application.
Top 8 lies on life insurance applications
- Tobacco use
- Prior and current drug use
- Multiple DUI’s
- The amount of Moving Violations they have
- Cancer history. This goes for you and your family history
- Traveling to risky and dangerous locations
- Income. Increasing it to be eligible for higher insurance coverage
How to get the best life insurance rate
People often think that going straight to the carrier and buying direct is the best way to shop. This is incorrect. You will only be able to get rates and products from that particular company. The best way to shop is to have an independent life insurance agent shop for you. Independent agents have access to the same rates and plans that you get directly from the carrier, but with many more companies to choose from.
Your independent life insurance agent’s job is to help find the best company based on the information you provide them. Independent agents are on your side and can truly help you find the best rates based on your situation. Finding and qualifying for the best rates can only happen if you are 100% truthful.
Give me a call at 888-411-1329 or send me an email. I’d love to help you find the best rates that are available to you.