Lying On A Life Insurance Application – What Happens?
The Most Common Reasons for Lying On A Life Insurance Application

Lying About Income
Lying About Medical and Family History

Sometimes there is no way to know your family medical history. That’s okay. Talk to your agent about what you know.
This is a tricky one. Particularly if your parents are no longer living when you apply for life insurance.
Lying About Smoking
Lying about Drug Use
Lying About Driving Records
Lying About Depression

Talk to your life insurance agent if you temporarily took anti-depressants to make a case for not raising rates.
All life insurance contracts have a clause for reasons they will not pay out. It usually includes suicide, acts of war, and dying while trying to commit a felony.
The Two Types of Lies On A Life Insurance Application
Lies of Omission
Attempts to Defraud
What Happens When A Lie Is Caught In Underwriting
When an underwriter sees a discrepancy, she/he will sometimes request a redo of that section of the application. It’s a polite way of saying, “I’m not sure you filled this out right, please do it again.” Your agent will know they are on to something even if that something is not yet specified.
Other times if the discrepancy is more serious, the underwriter will reject or postpone the application entirely.
The Two Year Contestability Clause
The law protects you, as the purchaser, with a two year contestability clause. Every life insurance contract has this.

Life insurance fraud raises rates for everyone. That’s why the company has a two year contestability clause.
It states that the life insurance company may legally contest anything they believe is false within the first two years.
Lies Caught At Time of Claim
The Only Time Over-disclosure Might Be Smart

If skydiving is on your bucket list, don’t worry about it for life insurance purposes. They underwriters can only make decisions about what you do at the time of application. They cannot underwrite the future.
Sometimes a little paranoia on insurance applications can be healthy too.
1 Comment
James Kaufman
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Great exposure.