Insurance applicants often fudge on issues ranging from DUIs to drug use. But it's hard to hide baldfaced lies -- even though some folks go so far as shaving their heads.
[Related content: insurance, life insurance, policies, insurance rates, fraud]
By Insure.com
The price of your life insurance policy often depends on your answers to a range of application questions, plus the results of your life insurance medical exam.
Best life insurance companies
Best life insurance companies
Some applicants succumb to the temptation to lie on their applications, hoping their misrepresentations will sneak through the approval process and garner them lower rates. Here are some of the most frequent lies discovered by life insurance companies in screening applications.
"I don't use tobacco": The desire to get affordable life insurance drives many applicants to not only check the "nontobacco" boxes on their applications but also to abstain for several weeks before their medical exams so that nicotine -- or, more precisely, cotinine -- does not show up in their lab results.
"We probably see more of this than anything else," says Brian Ashe, a past chairman of the Life and Health Insurance Foundation for Education. And some applicants may lie unintentionally. Applicants who use nicotine in other forms, such as a nicotine patch or chewing tobacco, may not realize they are in the "tobacco" category.
"In their own minds they are not tobacco users, but in life insurers' eyes they are, in terms of disclosure," Ashe says.
If a life insurance company finds out a person lied about tobacco use after he dies of a related cause, there are two common outcomes: The company could alter the death benefit to be equal to the amount the person would have gotten had they paid tobacco rates, or the company could rescind the entire policy. An insurance company's range of remedies depends on state law. Ashe says a rescission is generally limited to within the first years of a policy, known as the contestability period.
