Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com.

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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Lying on life insurance applications = not a good move.

Life insurance claims can absolutely be denied if the insurance company finds out someone lied on his or her application. This is, however, determined by how long the person has held the policy.

The first two years of a policy is known as the “contestability period,” during which companies can contest policies and claims.

Learning About the Application

During the application process, there will likely be medical examinations and reviews of your medical records. It is possible to make it through this process unscathed because, really, the insurance company primarily depends on your application and answers to figure out your policy and premium.

If you don’t pass their medical tests, however, and if you’ve lied about something that the tests discovered, then you can be denied coverage and there will be a big mark against you in the industry.

If you apply to other companies to get life insurance, they will refer to the MIB (Medical Information Bureau, not Men In Black), the central insurance database, and see that others denied you coverage not because (or not only because) you had one risk or another, but because you lied about it. Or they’ll see that you applied to one company, and disclosed that you had a health problem that you failed to disclose on the current application this time around.

At the very least, if you’re not denied coverage entirely, you’ll still be charged the higher rates you would have gotten anyway, meaning you would have wasted a bit of time and energy.

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If the Company Finds Out

If the company finds out within the first two years of the policy being opened (that contestability period) they can not only deny your claim or reduce the benefits of the policy, but they can also completely cancel the policy, without even having to refund the amount of any premiums paid. (They can do this if they wish to, but are not required to do so.)

A few things can happen when a claim is made on a fraudulent policy in this two year time. The company can deny it entirely, which means they will not pay anything toward the policy, and maybe not even any premiums that were paid on the policy.Another scenario, though, is that, depending on what you lied about, they might also decide to pay only a portion of the policy.

For instance, if you bought a non-smoker’s policy but are, in fact, a smoker, they might just pay the difference between the premiums for the two policies. Tobacco use is, in fact, the thing most often lied about on life insurance policies. Other things a person may lie about that can increase the later likelihood of ultimately getting a life insurance policy claimed denied include having a hazardous job, dangerous hobbies, or particular health risks or problems.

Can the beneficiary, then, contest the company’s decision to cancel a policy or deny a claim? Yes. This process can be very long and hard, though, for grieving or stressed families to go through.

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Contesting Decisions

However, if the two year contestability period has come and gone, the company has usually lost the right to deny the claim because of things the insured the failed to disclose on the application. Even if they discover the insured flat-out lied, the company no longer has the right to cancel the policy.

There have, though, been lawsuit cases during this time where the insurance company has won because they could prove the insured had completely lied about something, and was not required to pay the policy in full, of they had to pay it at all. So, while it is possible for one to win the gamble of getting through those first two years, the whole win is not always certain after that. What’s the ultimate cost?

Lying on an application for life insurance could, hypothetically, lead to policies that have much cheaper premiums. It is entirely possible to make it through the application process, and the contestability period with your policy still intact, but there is no guarantee of that and there is no guarantee that your family will be protected. If you get caught you will then be on a high risk list and pay the highest premiums around, if you can get insured.

Getting Proper Insurance

There are many insurance companies that work with smokers, those with bad health, and those who work hazardous jobs or enjoy dangerous hobbies. You can use our free online insurance quote tool to get back several quotes within minutes or seconds based on your honest answers. There are also some companies that do not make you do any examinations or file any reports. It is totally possible to get good life insurance without having to worry about losing it for one reason or another.

Enter your zip code to get free life insurance quotes now!