What would happen if you applied for life insurance and made a false statement on the application?

You may face the cancellation of your policy when the insurance company finds out that you have materially misrepresented or misstated your application details. Or worse, when the time comes that you need to make a claim, your claim may be denied. That is, if the claim falls within the waiting period (usually two years). The insurance company will just refund the premiums that you already paid.

And, even when the misstatement is not material enough to warrant the cancelation of your policy, the tendency would be that the insurance company will scrutinize all your other statements on the basis that you told an untruth. This will make it more difficult or longer for the insurance company to process your claims.

It may be tempting to give a few false statements in your application just to save on premiums. But it is never a good idea to do so. This is not the wisest way to save money.

Of course, there is a difference between something you willfully misrepresented and something you stated since you know it to be true. The first case is covered under "warranties" while the second is considered a "representation". When you honestly did not know that you had an illness and later found out about this, it does not become grounds for the cancelation of the policy.

Thus, it is wiser to tell the truth, pay the extra premiums and be assured that you will not have problems with your claims.

In addition, if you have tried applying for insurance but was denied because of a health issue, don't be tempted to try applying with another life insurance company and this time denying your health condition. Life insurance companies share information through the Medical Information Bureau and will know whether you have been denied insurance because of your health.

By full disclosure, this includes the fact that you smoke or are a occasional or heavy drinker. If you are a smoker and are honest about your smoking and the company gives you rated premiums, you can request to have these lowered when you do stop smoking.

To reiterate, tell your insurance company everything! This way you will not be wasting money and your family can be secure knowing that you are suitably covered with insurance.

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