Scam Discovered: Death Not Related to the Dishonesty

Scam Discovered: Death Not Related to the Dishonesty

by Leslie Freeland, March 15, 2017

A Disaster Waiting to Happen.

Did you know, the cause of your death does not have to match the lie on your life insurance application for the insurance company to deny the claim?

People obtain life insurance in order to compensate their loved ones in the event of their death. Unfortunately, sometimes people will get that coverage fraudulently. They think if they tell a little lie on the application, it will get them the coverage they want at the price they want to pay.

This is a mistake though. If the fraud is unrelated to the actual cause of your death, it can prevent your loved ones from receiving the payments you had hoped for them.

Lying on Life Insurance Applications

One of the most common reasons people lie on their life insurance applications is to obtain lower rates for their coverage. By saving money on their monthly premiums, though, these people are putting their beneficiaries at risk of not receiving the benefits of the life insurance policy.

For example, if you are a smoker, you may fail to disclose this information on your application. This could be intentional in order to get more affordable coverage, or it could be wishful thinking if you had planned on quitting in the near future.

Let’s say that you are then killed in a car accident, a death clearly unrelated to the fact that you were a smoker.

However, in processing your life insurance claim, the insurance company is likely to review your autopsy and other medical records to determine the exact cause of your death. When it is revealed that you were, in fact, a smoker, the insurance company can deny your loved ones’ claim due to your fraudulent application.

Because your life insurance policy was issued based on inaccurate information, this can nullify your policy, resulting in no payout to those you had hoped to take care of in your absence.

Even though your status as a smoker had no relevance to the cause of your death, it can result in the cancellation of your policy.

This is just one possible scenario that could result in your policy being thrown out due to fraud. There are many other ways that life insurance fraud can be committed.

Avoid This Unnecessary Risk

If you have the foresight to obtain life insurance coverage in the first place, it is clear that you care about your family and want to ensure that they are taken care of financially when you are no longer there to provide for them.

Even though it might be tempting to stretch the truth a bit on your application to achieve more favorable rates, don’t fall into this trap.

While you may think that you are unlikely to be caught, it is important to know that your insurance company will not pay out your benefits without a thorough investigation into your death and life before it.

In order to ensure that your loved ones will be taken care of, it is crucial that you are fully truthful when completing your application. Remember that it is more likely than not that any lies or omissions will be uncovered. Don’t put your family at risk of not receiving the compensation that you want for them. It is worth a slightly higher premium to have peace of mind that they will be cared for after your death.

Much like the Titanic, what appears like a good idea at the time might just end up a disaster.

 

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Asurea offers Life Insurance, Mortgage Protection Life Insurance, Medicare Supplement Insurance, Final Expense Insurance, Disability Insurance, Long-term Care Insurance, Retirement Planning products and more. For additional information, click on the ‘Learn more’ button below. Want to have articles just like this delivered to your inbox? Just enter your email address in the box below and click ‘Subscribe.’

This information is provided for general consumer educational purposes only and is not intended to provide legal, tax or investment advice.

 

Leslie Freeland

Leslie Freeland

Marketing Communications Coordinator at Asurea
Leslie joined Asurea as the Marketing Communications Coordinator in February 2015. Since then, she has been working closely with insurance professionals to educate the public on the importance of life insurance and protect the public from common scams with informational articles.
Leslie Freeland

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