What Happens If You Lie in a Life Insurance Proposal Form?

Every life insurance policy is provided after a careful assessment of an individual's needs. Since it acts as a financial safety net for your family in case of an unforeseen event, it is essential that you have the most appropriate life cover and sum assured. Therefore, it is advisable to provide correct information about your health, finances, personal and professional conditions. 

The consequences of lying in the life insurance proposal form can be as severe as the refusal of claim payment after the policyholder's demise, consequently leaving his/her family stranded. Read on to know more about what happens if you lie in a life insurance proposal form.

What Happens If You Lie in a Life Insurance Proposal Form

Here is the list of consequences you will face if you lie in a life insurance proposal form.

• Revision of the Premium Payment Amount

The result of withholding a medical condition to receive a lower premium from the insurance provider can be just a revision of the premium amount with the inclusion of the skipped health information.

• Investigation About the Details

The insurance provider can begin an investigation if multiple errors and inconsistencies are found in your life insurance proposal form. If you are found guilty of concealing your medical information, the insurer can reject your application and suspend you from applying for a life insurance policy for a specific duration.

• Rejection of the Claim Payment

The most severe consequence of lying in the life insurance proposal form can be the rejection of the claim payment made by the beneficiary when the policyholder passes away. Suppose the insurer finds that the life assured lied about a serious medical condition that eventually led to his/her death. In that case, they can dismiss the nominee's claim by citing the lies told before the policy inception.

Can I Rectify Proposal Form After Purchasing A Life Insurance Policy?

Section 45 of the Insurance Amendment Act 2015 states that the insurance provider gets the initial 3 years, from the date of granting the life insurance policy, to voice any concerns regarding the information provided by the life assured. The insurer will not pay the claims made under false information. 

Nonetheless, you should disclose every bit of information to your insurance provider in the spirit of the doctrine of utmost good faith (uberrimae fidei), a keystone of the insurance contracts. It preaches that the insurer and life assured should disclose all material facts, i.e., facts that may raise the level of risk, before the policy formation.

Take Away

Honesty during the policy inception can save your family from the dire consequence of claim payment rejection in the face of an unfortunate event. Moreover, a good insurance policy made through an honest assessment of your needs will prove to be the best financial decision in the time of an emergency.

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Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.