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Providing wrong information on the proposal/application form of life insurance policy can bring forth consequences that will not just affect the insured but his/her family as well. Let us see the effects that it might bring if you intentionally offer wrong information to your insurer.
Giving wrong information on the life insurance application form is not at all okay as it may cost you hugely. Let’s find out how?
Every person looking to buy term life insurance has to complete the procedure of filling the application form before he/she could avail a cover of life insurance. In this application, the candidate has to offer certain information with regards to his/her finances, career as well as health and other details as required by the insurer. All such details help the insurer to determine the level of risk that the individual poses. Moreover, they are also used to consider the premium amount that the insured would pay.
Thus, it may seem tempting enough for the insured to hold back certain details or give wrong information so that they could lower the premium price of their life insurance cover or gain any other benefit. However, the fact is, it is extremely important to provide only the correct and genuine information in the proposal form. This is because, if the insurer finds out the lies of the applicant, they may take strict action on the person.
Well, before talking about the dire consequences of such action, let us understand the significance of the proposal form in the first place.
A life insurance proposal form is an application that serves as a legal document which the policy seeker needs to fill with his/her personal details. These details support the insurance company in understanding the individual well and thus require all necessary details of the applicant. The information allows the insurer to underwrite while selling the policy.
Among the many inputs or details required to mention in the proposal form of a life insurance policy, the details of your age in years, your annual income as well as your occupation plays a great role. The age of the applicant helps in deciding the premium amount, while the income details decide the coverage level that can be allowed. The applicant also needs to fill the nominee details in the form so that they can make sure to give the insurance benefit to the right beneficiary.
Below are some situations that may arise if the applicant is caught lying on Life Insurance proposal form or giving misleading information on the proposal form :-
This happens in case the policyholder misguides the insurer by lying about something extremely serious like a severe medical condition or any other information to get benefits on life cover. Hence, it is better to be honest while filling the life insurance proposal form to prevent such a situation.
There is a 3 year clause fixed for the insurers by the Insurance Amendment Act 2015 section 45 which says that a term life insurance policy cannot be canceled on any ground after 3 years of issuance of the policy. Thus, it means that the insurer has 3 years within which they can raise objections regarding whatever is declared on the policy application. However, the regulator doesn’t specify that frauds are barred from the scope of influence of the 2015 Act and so if claims are found to be fraudulent will not be paid.
Hence, despite this clause it is advised that the insured should reveal everything honestly in the proposal paper at the time of availing insurance.
While buying a life insurance policy, portraying honesty is definitely the best thing to do. This is because if you try to provide wrong information and deceive the insurer so as to pay a lower premium, it might have adverse effects on your family members at the time of seeking benefit in case of your sudden demise. This way, you will lose the purpose of buying a life cover and won’t be able to support your family after you are gone.
Thus, we can say that the consequences of providing wrong information to the insurance company or lying to your insurer in the application form is not a good idea as discussed above. So, you should rather be honest about everything at the time of filling the application, be it a medical history or lifestyle habit. Don’t get lured to pay a low premium by misleading your insurer.
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