Honesty on Your Life Insurance Application is the Best Policy
When you apply for life insurance, a good part of your life is put under the microscope during the underwriting process. Insurance companies will look at everything from your health to your hobbies. Life insurance companies leave no stone unturned when determining your health class rating so it is best to always tell the truth on your application. If the life insurance company feels that you have lied or misrepresented yourself on your application, they could refuse to pay your death benefit if you pass away. Here’s why Honesty on your life insurance application is the best policy.
It’s Difficult to Outsmart Life Insurance Companies
Don’t think of it as the life insurance company trying to catch you in a lie. They are simply trying to gather as much information about you as possible so that they can determine what type of a risk you represent. Life insurance companies have several different resources at their disposal to determine your health class. Here are some of the resources used by life insurance companies to during underwriting:
The Application Itself – The application asks a lot of personal information such as health history, occupation, salary, net worth and even hobbies. Do you have a risky job? Do you have any dangerous hobbies? If so, expect to answer specific questions about each. Believe it or not, life insurance companies have a questionnaire about pretty much any hobby or sport you could imagine.
Paramedical Exam – You will be required to take an abbreviated medical exam paid for by the insurance company. It takes about 20-30 minutes and it can be done in the comfort of your own home. The examiner will take your height, weight, blood pressure, blood sample, urine sample, resting EKG (depending on the size of the policy) and ask medical information such as the name/address of doctors and other medical history. The paramedical exam is a very important part of the underwriting process.
Medical Records – If you have disclosed health issues or if something comes up on the paramedical exam that raises a red flag, the insurer may request your medical records from your doctors. This is initiated and paid for by the insurance company. The underwriter will review your medical records to help determine your health situation.
Medical Information Bureau Report (MIB) – If you’ve ever applied for life insurance, chances are you have an MIB report. The MIB is a not for profit member organization made up of insurance companies that offer an information exchange. When you apply for life insurance, information about you is loaded into the database. If you apply for life insurance again in the future, the life insurance company will reference your MIB file. The MIB is meant to prevent fraud and protect the life insurance companies from loss.
Pharmacy Database – If you are taking any prescriptions, it will be documented in the pharmacy database. If you choose not to disclose that you are on high blood pressure medication, the life insurance company will find out during underwriting. In some cases, medications in your file won’t be an issue. For instance, if you were on an antibiotic for a week because of a sinus infection a year ago, that won’t have a bearing on your health rating. It’s the daily medications that the life insurance companies want to know about.
Motor Vehicle Records – Your driving record is important in determining whether you are a high-risk applicant. If you have multiple speeding tickets, DUIs or a suspended license, you might be deemed too risky to insure in some cases.
Some Scenarios When Withholding Information Will be an Issue
Withholding Medications – Unfortunately, this is common during the application process. Let’s say you’ve been on an antidepressant because of slight depression for the past 10 years. You don’t think it’s a big deal because you see your therapist only to get refills on your medication and you haven’t felt depressed in a long time. You decide not to disclose the medication to your agent. The life insurance company will see your prescription in the prescription database and it will immediately raise a red flag. They will want to know the history of your depression and any other specifics. What most people don’t realize is that treated depression can still qualify for very affordable rates with many companies.
Not Following Doctor’s Orders – Your doctor may want you to have a specific test done or get you on a certain medication. If you choose not to follow your doctor’s orders, your application could be postponed if the life insurance company finds out. This will usually come up if your medical records are ordered. Until you take action, your application will most likely be postponed. For instance, if your doctor orders you to get a colonoscopy because you are having intestinal issues, get it done. Not only does it make sense to get it done to rule any issues, but it will move the underwriting process along more quickly.
Withholding Dangerous Hobbies – If you engage in risky hobbies such as scuba diving, sky diving, piloting aircraft or mountain climbing, you will be required to fill out a questionnaire about the specifics of your activity. If you choose not to disclose your risky activity and you pass away within 2 years of owning the policy, your beneficiaries could be denied your death benefit.
Lying Could Void Your Policy – You have a 2 year contestability period once your policy is in force. If you die within the 2 year period, the insurance company can deny your claim if they feel that you lied or misrepresented yourself on the application.
Your Agent is Your Friend
You and your agent are a team. It is your job to be honest on your life insurance application and give your agent as much health and lifestyle information about you as possible. It is your agent’s job to find you the best priced policy that meets your life insurance planning goals. The more information you can give your agent, the better they will be able to match you with the right insurance company. Life insurance underwriting has come a long way. Even if you control high blood pressure or high cholesterol with medication, many companies will still offer their best rates in many cases. If you have a condition that is more serious, giving your agent as much information about it is key. They will be able to match you with the company that best underwrites more serious conditions such as diabetes or COPD. We have access to over 40 of the top life insurance companies out there. We take the time to learn as much about your case as possible so that we can match you with the right company. Contact us for a free consultation at (888) 687-9444 or email us at info@archstoneagency.com.
About Us
Archstone Insurance Services, LLC is an independent agency that shops over 40 of the top life insurance carriers to provide huge savings on life insurance coverage for our clients. We are happy to answer any questions you might have about any of the insurance products we offer, your planning needs or your existing coverage. Feel free to call us directly at (888) 687-9444 or email us at info@archstoneagency.com.
