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The Cost of Lying on Your Life Insurance Application

By Byron Udell | October 5, 2009

Lying on your life insurance application can come back to bite you on the butt big time. To find out why, read on.

An affordable life insurance policy is easy to find, so there’s no need to lie on your application. Since term life insurance rates are near historic lows, almost everyone can find a term life policy that suits their individual needs at a price that won’t break the bank. If you think that lying on your application is the only way to get cheap life insurance, keep reading.

Because by lying during the life insurance application process, you may end up hurting the ones you love most by leaving them financially unprotected when you die. Life insurance companies have the right to question any personal information you provide on your life insurance application, especially if they believe something to be untrue or exaggerated. After discovering a lie on a life insurance application, the carrier can and will cancel the policy. To avoid this from happening, it’s important to understand your rights when applying for life insurance coverage.

First, know the difference between a warranty and a representation. A warranty is something that you know to be true, for example, a pre-existing health condition that you’re aware of and treat on a regular basis, like heart disease or diabetes. A representation (or a misrepresentation) is something that you believe to be true, but aren’t 100 percent sure about. For example, you think you might have diabetes but you haven’t been officially diagnosed, so you state that you’re in perfect health on your application. Lying about a warranty leaves you at risk of being uninsured, meaning a carrier can cancel your contract. A carrier may cancel your policy if you lie about a representation, but consequences vary among the best life insurance companies, especially if you’re diagnosed with a condition after you submit your application.

In any case, it’s best not to lie about a health or lifestyle factor because the life insurance carrier will eventually find out. They have access to your medical records and are allowed two years to catch a condition that you did not initially report. How does this affect your loved ones? If you were to die due to a condition that you lied about on your life insurance application, the carrier would cancel the policy and refuse payment of the death benefit, leaving your family unprotected. The moral of the story is, don’t lie on your life insurance application! You can find low-cost life insurance without risking your family’s financial future by contacting a licensed life insurance agent at a multi-carrier brokerage firm. They can compare life insurance rates to get you the best value in life insurance based on your individual lifestyle.

We only work with highly rated insurance companies – brand names you trust. You may be able to save money without sacrificing quality and strength.