Consequences of lying on a life insurance proposal form

A life insurance policy is an excellent option to secure your family against running into financial trouble in your absence. A plan like a life insurance policy can take care of your family's expenses just like you, even when you are not around. Thus, a life insurance policy is a must-have.

The initial step towards getting a life insurance policy is to fill out a life insurance proposal form. However, an individual should be completely truthful while submitting all the information as truth is mightier than a jillion lies. The consequences of lying on a life insurance proposal form related to age, weight, family and personal medical history, and others can create great trouble for the life insured along with their family.

So, to keep you safe from being accused of financial fraud and to get a life insurance policy without any hassle, we've enumerated some of the consequences of lying on a life insurance proposal form in the section below.

According to Section 45 of the Insurance Amendment Act 2015, life insurance policies can be interrogated on any grounds within three years of their issuance. Furthermore, if an insurance company discovers misleading data provided by the life insured, different consequences may occur. Here are some scenarios that might occur if and when the life assured is discovered to have lied on the proposal form:

An insurer may undertake an investigation after receiving a life insurance proposal form. Furthermore, if serious inconsistencies or errors are discovered during the quest that was not previously reported, the insurer may close the case and prevent the applicant from applying again for a while.

Lying on the life insurance proposal form can also lead to the refusal of claim payment in whole. The nominee of the life assured can be denied the sum assured after their demise if the insurer discovers that the policyholder was not completely honest while filling up the life insurance application form.

An insurer may open an investigation if the life insurance proposal form of an insured person includes any misleading information. Thus, the process may take a lot of your time. And sometimes, if the results of the investigation favour the insurer, it can result in the denial of claim settlements.

Lying to get a lower premium might get you into big trouble. If an individual sets aside from revealing information regarding a medical condition to get the lower premium, then the company may revise the premium to compensate for the addition of the formerly excluded health information.

Thus, the greatest way to stay out of trouble while purchasing a life insurance policy is to tell the truth. A life insurance policy offers financial security to the beneficiaries of the life assured, therefore by giving incorrect information, one risks jeopardising their future. The surviving family members should always have a support system in place, so it is always preferable to divulge all information irrespective of the premium being higher.