Should I Lie on my Insurance Application?
Lying on insurance applications is quite common but that doesn’t make it the right thing to do. Not only is it wrong from a moral perspective but lying can cause serious ramifications for you and for your insurance coverage.
The Consequences of Lying
Most people lie on their applications either to receive approval for coverage and/or to receive lower premiums. While insurance is expensive at times and can be difficult for some people to get, the risks of lying greatly outweigh the short-term benefits. And since the insurance company is inevitably going to find out about the deception you can almost be guaranteed negative consequences.
Take life insurance, for example. With some term life policies, you may be able to disguise certain illnesses and claim to be healthier than you are. Without lying, you might not be eligible for coverage at all because you are considered high risk. But what if you die during that policy’s term?
The insurance company is going to thoroughly investigate your policy and your family’s claim before paying a dime. If they discover the deception, which is likely because they will probably look at the medical reports, your family won’t receive a penny from that policy nor will you receive any of your premiums in return. You’ll have wasted all of that money and left your family with nothing.
Lying is also common on health insurance applications. Smoking, for example, can cause you to have very high premiums. You may also want to avoid having certain medical conditions that were pre-existing excluded from the plan. If you lie on your application and are somehow approved, you can guarantee the first major claim you place will cause your application to be scrutinized.
If you are found to have lied about anything considered material, your insurance coverage will be revoked and any payments made on your behalf under that coverage will have to be repaid to the insurance company. You could literally be ruined financially just for saying you’re not a smoker when you apply for health insurance.
Will They Find Out?
Don’t make the mistake of assuming you are smarter than the insurance company. No matter how clever you are the insurance company has experience and technology on their side. They have ways of finding out whether you’re smoking, whether you have diabetes or not, how many car accidents you have had, and nearly everything they need to know about you.
That doesn’t mean they will find out at first. Insurance companies sometimes don’t do as much initial investigating because if everything looks good they do want to get you on board and start collecting those premiums. So getting approved doesn’t mean you’ve successfully deceived the company.
Chances are that your deception will be discovered when you make a claim. Insurance companies don’t want to payout money under false pretenses so they do investigate. That means when you need the coverage the most is when you’re most likely to lose it thanks to lying. It’s not worth the risk. You’re better off being honest and accepting those consequences.
June 18, 2009, Posted by Rainy Day Mitch