Quite frequently, applicants for life insurance policies tell various lies in their application in order to get a policy or to be eligible for lower premiums. But you have to be extremely cautious as these lies can make your life insurance policy useless in the long run.
Applicants tell various lies in their forms such as those regarding drug abuses, drinking and other common health related factors. A common lie is regarding smoking. Many smokers often give up smoking a few days before the medical exam so that nicotine does not appear in the medical examination. They claim to be a long term non smoker in the application. Such a false statement could lead to you being denied payment for your medical expenses when the need arises.
Another common lie often told by applicants is regarding drug use, but such a lie is easy to catch. Proof of drug use can be obtained from blood test, urine tests and even lab tests of hair. Criminal and medical records can also lead the company to the truth. Moreover, it is not necessary to lie about drug use as it does not automatically make you ineligible for the policy.
Lying about depression is also a wrong step as this lie can be easily unmasked by medical examination or by medical history. Lies about DUIs and other such violations are also common and they can be easily unearthed by the insurance company from the MVR (motor vehicle record).
Other common lies include travel to dangerous places, and income. These lies are again easy to catch and they often alert the insurance underwriters who then start searching for other misrepresentations.
If a disclosure is not made by an applicant or if a lie is told by the applicant then the company can even rescind the entire policy. Alternatively, it would adjust the payments depending upon the premium that it would have charged if correct information was given.
Remember that your lies in the application can destroy your life insurance policy in many cases. All incorrect statements are not intentional and some could be mistakes because of the ignorance or forgetfulness of applicants. So be very careful when filling the application form.
The options available to the insurance company would depend on state laws. In most cases, the company can rescind the policy in the incontestability period, which is within a few years of getting the policy. Lying in application forms also amounts to fraud and it could have many other adverse consequences.