How Life Insurance Companies Get to the Truth

08/03/2020

Life insurance companies need honest answers to questions about your health to determine appropriate premiums and coverage levels.

Some applicants are tempted to leave out or misstate information they don’t see as important — or think may adversely affect their benefits.

Some of the areas people may not provide complete information on are:

  • tobacco, alcohol, or drug use;
  • depression;
  • traffic violations;
  • cancer or heart history;
  • international travel

But insurers do their homework. To verify health and life insurance information, they can access the Medical Information Bureau. (You can get a free copy of your record upon request.) Insurance companies can also access your prescription usage history.  Discrepancies between your application and their research could lead to a claim denial, higher premiums or policy cancellation. 

All life insurance companies have a contestability period clause (usually 24 months) when the insurance company is allowed to review your coverage for anything you misrepresented during the application process.  The carrier will want to make sure that you didn’t withhold or lie about any facts about yourself during the application process.  If you die during the contestability period, and misrepresentations come to light, the life insurance company may cancel the policy, refuse to pay the death claim, or subtract money from the death benefit based on the premiums you SHOULD have paid if that information had been presented during the application process. 

Just because your life insurance company is investigating the circumstances of your death doesn’t mean it will reject your beneficiary’s claim.  The contestability period exists to make sure the information you supplied on your application was accurate .  If it is, your beneficiaries are good to go.  It’s important to make sure you supply complete and accurate information to ensure your beneficiaries receive the benefit you paid for. 

If you’re interested in getting life insurance coverage and are wondering if you’ll qualify for a great premium and great coverage, contact us.

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