3 Things Not to Say on a Life Insurance Application
What not to say on a life insurance application. These are the details people leave out and add that end up costing them more money and sometimes being rejected for coverage.
Do not Lie
All life insurance policies, no matter what state issued in, have a contract stipulation called a non-contestability period. This standard policy feature gives insurance providers the right to contest a death claim made within the first 2 years of the contracts policy date. When the applicant first applies, they are put through a underwriting process where the potential insurer ask direct questions about the applicants health, activity, and criminal history. It is very important that no misrepresentations or lies are told during this questions and answer process, and we mean none at all. The smallest lie or omission can give the insurer grounds within the first 2 years to deny a death claim. We have seen claims denied for failure to disclose use of a seasonal allergy inhaler, substance abuse treatment, and even the insured’s height weight measurements. The most common lie told on life insurance applications is the use of nicotine. Often, insurers word the use of nicotine as either a “smoker” or “non-smoker”. This label is given however even when the applicant is not a actual smoker but does use nicotine in some form (vape, chew, hookah, snuff, cigar). Do not be confused by the labels, any nicotine usage must be disclosed to the insurer or there is a great chance of claim denial.
Do not answer questions that were not asked
As we say in the military loose lips sink ships. Insurers put a great deal of thought and effort into sculpting their applications and underwriting processes for each type of policy they offer. Each question asked has a detailed condition, action, and time period that is being referenced. It is crucial to listen to the details of the question and to only answer what is asked. For example, “In the last 4 years, have you been diagnosed or treated for malignant cancer?” should be answered yes only if all the conditions of the questions are met. You were diagnosed in the last 4 years, for malignant cancer. Do not use this opportunity to tell the agent or advisor about the bout of skin cancer you had 5 years ago, or how you secretly think you may have developed undiagnosed cancer at some point in your history. Any information disclosed to the agent or advisor puts them in the position of having to disclose that information if they feel it may be pertinent to the underwriting process, even if the insurer did not originally express concern over that issue. By providing information that was not inquired about or misunderstanding the specific details or the questions, your are greatly increasing the chances of adverse underwriting outcomes and application denial.
Do not make jokes
The question and answer period of the application process is the insured’s chance to show their coverage worthiness. It is their responsibility to demonstrate they present little short term risk to the insurance company. This is in effect a interview process in which one should be putting their best foot forward. A good advisor will often make a applicant feel comfortable, but do not get too comfortable. When it comes to the actual application only serious answers should be provided so as to deny any opportunity for confusion or misunderstanding. We find the activities section elicits the majority of these reactions. For example, “In the next year do you intend to scuba dive, balloon ride, competitive rodeo or sky dive?” This is not the time to joke about how you do plan to do one of those actions no matter how silly you may think it sounds. Fact is there are people who actually do those things and a comment made in jest could be taken more serious than you think. Remember, you and the agent or advisor most likely do not interact on a consistent basis and they may not interpret your words or actions as you intended. These misunderstanding can again lead to adverse underwriting or application denial.
Bay Life Brokerage is a independent life insurance brokerage that specializes in leveraging companies and products against one another to produce the most desirable result for life insurance protection for our clients as possible.