Top 10 Lies Told On A Life Insurance Application
When applying for life insurance, it’s vital to understand there are two necessary types of people who can get your application approved: your life insurance agent and the insurance underwriter.
The life insurance agent and insurance underwriter play different roles. The life insurance agent “works” for you by finding the best life insurance option that suit your circumstance; while the underwriter’s role is to protect the insurer by minimizing the insurance carrier’s financial risk. Underwriters are able to minimize financial risk by denying life insurance coverage to higher risk candidates or by suggesting higher premiums.
Why Then Do Life Insurance Applicants Lie On the Application Form?
Life insurance applicants lie when they don’t realize that their agent is working for them: helping them find the best life insurance option available for them. The applicants feel they need to refrain from disclosing a particular condition that may deal a terrible blow to their application.
Whether the life insurance applicant buys life insurance application from the insurance company directly or from its agent, both the agent and underwriter work for the same company. And that is why we recommend that you work with an independent agent preferably commercial insurance broker who is not bound to any life insurance carrier and is free to pick the best life insurance company that is best for you.
Lying on a life insurance application is a bad idea. Let’s take a look at top 10 lies told on a life insurance application.
1. Non-User of Tobacco
Applicants frequently deny using tobacco because of the high premium associated with tobacco usage. Some applicants don’t know that they are lying simply because they think the tobacco use applies to only cigarettes. No, in the life insurance industry, tobacco use is not limited to cigarettes only – all forms of tobacco use is considered.
Even if you don’t smoke cigarettes or marijuana but still use other products containing nicotine like Nicorette gum, you are still considered to be a tobacco user by the life insurance company. This is because the life insurance company is not looking for tobacco levels in your system; they are looking for nicotine levels.
So if you have used any of the following products containing nicotine in the last 12 months, you will be considered as a tobacco user by most life insurance company:
- Nicotine gum e.g. Nicorette,
- Chewing tobacco, etc.
Now given the opportunity to save some money by qualifying as a non-tobacco user, many life insurance companies employ the use of accurate testing procedures and also use medical records to reveal possible tobacco use.
Therefore don’t lie because if you lie on your insurance application, insurance companies have a “contestability period” which states that within the first two years of a policy being in put in force, the insurance company has the right to contest any information you submitted during your application. This means that should you die within two years of within two years of your policy being in force and the insurance company discovers that you intentionally lied on your application; the insurance company can deny your claim and return your paid premium to your family.
Therefore instead of lying on the application, work with an independent agent that will help you find the life insurance company that will place you in a non-tobacco user class if you use the products containing nicotine listed above.
- Not a Drug User
Many life insurance applicants try to conceal their drug use (both illegal and legal medical marijuana use). The insurance applicants don’t know that life insurance companies can learn about an applicant’s previous or current drug use from many sources such as the applicant’s criminal and medical history.
There are insurance companies that show leniency to drug use both legal and illegal and that is only when if it has been disclosed from the beginning.
3. I Added Weight after the Holidays
There is no reason to lie about your weight. Adding a few pounds can affect the cost of your life insurance application. That’s why when you decide to apply for life insurance, know what you weigh in the afternoon. This way you can plan to take your medical examination in the morning which will mean you will weigh a few pound less than the weight you wrote in your application. Doing this will help you stand the best of qualifying for the rate you have been quoted.
4. Travel/Dangerous Hobbies
If you are going to travel to a potentially dangerous place or you will do some crazy hobbies like bungee jumping, skydiving, please inform your life insurance agent immediately about it. This is because these choices can have significant impact on your life insurance application. These choices can even make your application denied by life insurance companies.
5. Never Experienced Depression
It’s a bad ideal to lie about your depression to your insurance agent. In fact, you should have informed your insurance agent about your depression before “a prescription database check” is ordered and reviewed.
A prescription database is a report that includes a list of every prescribed medication you have used. And every term or whole life insurance policy application requires one before an application is approved.
The insurance company will then use the information gotten to determine if it can offer you coverage immediately or request for additional medical records before a final decision can be taken.
So do yourself a huge favor by letting your insurance agent know about your depression. This way your insurance agent can place you with an available depression friendly insurance company.
6. I Have Been Charged With DUI
If you have been charged with DUI within the last 12 months, it is essential you let your insurance agent know about it since insurance companies will order a motor vehicle report.
Letting your insurance agent know about your DUI record will help the agent place you with a DUI friendly life insurance companies.
7. I Have Never Been Involved In a Car Accident.
If you have been involved in a car accident, be honest about it. After all, the life insurance companies will order a motor vehicle report to check for speeding tickets or accidents recorded. This way your insurance agent will be able to recommend the life insurance company best suited for your situation
- I’m Not Diabetic; My Doctor Said I May Be Prone To Diabetes
In the life insurance industry, there is no sitting on the fence position when it comes to being diabetic. You are either diabetic or not. And one you have been diagnosed with diabetes, you are considered to be diabetic for life by the life insurance company.
So, who is considered a diabetic in the life insurance world?
- Anyone that has been prescribed medication to treat diabetes (with the exception of gestational diabetes).
- And anyone with an A1C blood sugar level above 7.0.
If you have been in any situation above, then you are considered diabetic by life insurance companies. Your insurance agent will work with you to help you find the diabetic friendly life insurance company.
9. We Don’t Get Sick in My Family
This may be true, but some insurance companies will still use your family’s medical history to determine what rate class you will qualify for. A family history of the following medical conditions can play a role in what rate class you will qualify for:
- Heart diseases,
- Stroke, or
So, if your agent knows about your family history from the beginning, he or she can help you find life insurance companies that may not consider the above listed family history in their underwriting process.
10. I Make $150,000 a year delivering mails!
Life insurance policies are meant to compensate the injured party from harm or loss at the time of loss.
So your life insurance policy should be able to compensate your family up to the dollar amount they will suffer financially due to your death.
Life insurance companies don’t want to insure anybody above and beyond the calculated value. Because of this, life insurance companies have designed strategies to help protect them from over-insuring an individual.
So, if you are 65 years old and earn $50,000, you will find it hard to qualify for a $1,500,000 life insurance policy even if you are fine paying for it. This is because the life insurance company doesn’t want to make you worth more when dead than alive.
So, it is better to be honest from the onset of the application if you want your application to be processed.
So Don’t Lie on Your Insurance Application!
Since you have made it this far, I will like to leave you with three pieces of advice that will guide you in looking for the life insurance agent that will work well with you.
- Don’t ever lie on your life insurance application; it’s not worth the risk.
- Find an independent life insurance agent that will have your best interest at heart; he or she will work for you and not for any life insurance agent.
- Answer to the best of your ability every question your life insurance agent asks you.