As they say, “Honesty is the best policy.” This is especially true when it comes to buying life insurance. The cost of lying on your policy application could prove catastrophic for your loved ones down the road.
Let’s face it. People exaggerate on occasion. Sometimes they lie about their age. Or their weight. Or their bowling score. All minor stuff, right? But what about flat-out lying? Well, if you’re buying life insurance, telling even a little white lie on an application can be disastrous. But more about that in a moment.
By the way, you don’t need to lie to get low insurance rates. They’re already pretty darn low. But if you want the life insurance you buy to be there for your family when you die (and, of course, YOU DO!)…be honest about EVERYTHING when applying.
Why you shouldn’t lie on your life insurance application
Life insurance companies have the right to rescind your policy if they determine that you have lied about something material on your application. Lawyers call that “Fraud.”
So if you’re caught in a lie or exaggeration, the insurance company could cancel your policy. And who does that hurt the most? Your family.
Remember, life insurance is an amazing product that will turn pennies into dollars when your loved ones need it the most. So don’t be a numbskull and give the life insurance company a reason NOT to pay your family when the time comes.
Warranty vs. Representation
A warranty is a statement of fact that you attest to on your policy application, such as informing the insurer that you have a pre-existing health condition, like heart disease or diabetes. A representation (or misrepresentation) is something you believe to be true, but aren’t 100 percent sure about. For example, you think you might have diabetes, but haven’t officially been diagnosed, so you inadvertently state that you’re in perfect health on your application.
If a warranty statement made by you on your application that is later proven to be knowingly false, the insurer could cancel your contract. A carrier could also cancel your policy over a representation, but they would have to prove that you knowingly made a false statement on your application. The insurer can’t cancel your policy merely because you made a statement that later turned out to be false.
Can you get life insurance without a medical exam?
Yes. You can get life insurance without a medical exam. But make no mistake…these policies still go through “underwriting.” There are still questions that require honest answers. So they are NOT a way to buy a policy without having to disclose some sort of serious medical condition you are aware of.
The moral of the story…it’s best not to lie about a health condition, because you can never be sure the life insurance company won’t discover it, either now or worse…later.
So not only is “honesty the best policy,” but it’s also the smart thing to do if you care about your family!