There are numerous life insurance companies offering competitive (and not so competitive) rates on all types of policies. The key, as you might deduce, is comparative shopping. Each company requires an application and can then give you a quote based on the information you provide them. It is imperative that, when filling out the primary questionnaire that you be as forthcoming and honest as possible. Remember, you are vying for a quote, and it is preliminary, so should the company find out you were less than totally honest on your questionnaire, or on your following medical exam, the company can choose to withdraw their acceptance and cancel your newly procured life insurance policy. Best case scenario, if they do not rescind their approval, they could very well use the newly found information that was deemed incorrect on the questionnaire as an excuse to raise your premiums to levels that you are unable to afford, forcing you to either reduce your coverage or start all over in your quest for an affordable life insurance company. Simply put, if you are unsure as to an answer on any questionnaire or medical exam, just admit that you cannot remember or do not know and let the financial experts at the insurance company sort it out. If you answer in this way, you have covered yourself by not putting down information that could later come back to haunt you.
Life insurance companies, like any other type of business, exist to make money and, therefore, they have very strict guidelines that they follow to demarcate the healthy from the unhealthy. Healthy, young applicants receive the best, most affordable premiums, while others struggle to qualify for the second best premium rates offered. It is said that 5% of applicants misrepresent certain facts in order to qualify for a better premium rate. The main reason for this is the fear of having to pay rates that are nearly unaffordable for minor health problems they believe might cause the insurance companies concern. There is a reason why your mother’s favorite saying was probably something to the effect of, “honesty is the best policy”, even though she was not speaking of insurance policies.
Life insurance companies, like any other type of business, exist to make money and, therefore, they have very strict guidelines that they follow to demarcate the healthy from the unhealthy. Healthy, young applicants receive the best, most affordable premiums, while others struggle to qualify for the second best premium rates offered. It is said that 5% of applicants misrepresent certain facts in order to qualify for a better premium rate. The main reason for this is the fear of having to pay rates that are nearly unaffordable for minor health problems they believe might cause the insurance companies concern. There is a reason why your mother’s favorite saying was probably something to the effect of, “honesty is the best policy”, even though she was not speaking of insurance policies.
If you lie to your life insurance company it usually turns out doing you more harm than being honest would have done to your premiums. The legal term (yes, it is illegal and there is an actual name for it) is Material Misrepresentation, meaning you have misrepresented facts that are crucial to the company’s ability to issue your policy. The underwriters who are in charge of studying the details on your application and deciding if you qualify for any of that company’s life insurance policies are good at what they do, and are skilled at deducing facts from fiction. Also, before you are issued a policy, an independent medical exam is performed and many facts can be verified by this exam as well. You will be given blood tests, an electrocardiogram and other tests, and these along with your previous medical records and prescriptions obtained from your primary care physician are used to evaluate your health, and by proxy, your honesty on the application. If there are medical problems that you attempted to hide with false statements on any of the paperwork you turned in, the insurance company has every right to deny you coverage. In addition to this denial after all of the work you put forth attempting to obtain an affordable policy, the false claims you attested as truth will go on your permanent record and every time you apply for insurance, be it life or health or whatnot, the company will be able to see that you have a history of misrepresenting facts on previous applications for insurance, making you more of a risk. This not only stains your integrity, but upon your passing, it could very well put your family’s financial well-being at stake, allowing an opportunity for the life insurance company to deny your death benefits claim.
Insurance fraud is a serious crime, and should not be taken lightly. The companies take it quite seriously, as should you. In the long run, honesty will bring you peace of mind, just as life insurance can do. If you are honest and forthcoming on your application, then you have nothing to worry about, and you can rest assured that your family will be able to collect the death benefits upon your passing and not have to worry about their financial future. In your heart, you know at the time of your passing, one less thing to worry about will mean the world to them, and their financial assurance from your life insurance policy is one gift you can leave them when you’re gone.
