What to do when an applicant for an individual health policy failed to complete the application properly
What happens when a life insurance application contains bad information? Wrong or false information can invalidate a life insurance policy. An insurance company can contest a life insurance contract due to application fraud. Even when a mistake is unintentional, any misrepresentation or omission on a life insurance application can make it difficult for your beneficiary to recover the death benefits you want them to receive.
When applying for life insurance, be as thorough and accurate as possible on your application. Accuracy will help ensure that your beneficiary will recover the benefits for which you are paying. And if your application is prepared by your life insurance agent, review it carefully before signing. If your application contains misrepresentation of material facts due to your agent’s negligence, that can also result in your claim being denied. Also, agent lies can void the policy. Review the application carefully before signing it and submitting it to the insurance company.
What happens if you lie on your life insurance policy application?
Your beneficiaries will likely have trouble getting their claims paid. Any misrepresentation on a life insurance application, whether intentional or unintentional, by you or by your agent puts the life insurance benefit at risk.
I am a beneficiary – Can I claim death benefits if information on the life insurance application was wrong?
Yes, you should always submit a claim for benefits. If you are a beneficiary, how are you to know that your loved one’s application contained a misstatement before your claim is denied?
If you have already submitted a claim and got your life insurance claim denied, you may still be able to recover with the help of an experienced life insurance lawyer at the Boonswang Law Firm. Take a look at some of the following examples of wrong information on the application – in our case studies, you will see that our client’s claim was initially denied, then we got our client paid. While these are all real-life situations, keep in mind that we cannot guarantee that the result of your matter will be the same.
Wrong Age on Application
An application with an incorrect age can make it difficult to recover benefits. Many insurance policies contain a “misstatement of age provision”. A misstatement of age clause states that the insurance company will only pay the amount of benefits that would have been purchased for the premium if the correct age had been provided.
In other words, a beneficiary’s claim will pay out the amount of money that it would have paid out if your loved one’s age was accurate. This payout will certainly be less than expected under the current policy.
Even if the misstatement was accidental, an insurance company is likely to reduce benefits to match the true age of the insured. Insurers also reduce benefits if someone other than the insured (such as the agent) is to blame for the misstatement.
Case Study #1: Having interviewed the insured and the insured having answered all questions honestly, the insurance agent prepared an application and the insured signed it without reviewing it. It set forth her age as 10 years younger than she said it was. Because the agent prepared the application, the agent’s knowledge was imputed to the company and no fraudulent intent could be shown of the insured. We got our client’s claim paid.
Inaccurate Income Listed
When applying for life insurance, applicants may be tempted to stretch the truth in their favor. Lying on a life insurance application is always risky: in most states, an insurer can deny a claim even if the misrepresentation and the cause of death are completely unrelated.
Overstating your income, or even estimating your income, will increase the risk that a claim is denied — even if the insured never missed a premium payment. If your claim is underpaid or denied because of inaccurate income, you will likely require an experienced law firm like Boonswang Law to help you recover.
Inaccurate Weight Listed
Insurance companies rely on weight to decide your rate class and premiums. Because weight is an important factor for all insurance companies, an inaccurate weight will increase the chance that your claim will be delayed or denied. Insurance companies will always know if you or your loved one’s weight is inaccurate. Insurers receive an accurate report from your life insurance medical exam, and may even look at your health history to verify your weight.
Life insurance height and weight charts are available online to understand what category into which an individual is likely to fall based on their BMI. Obese individuals are still eligible for life insurance and are likely to find coverage that meets their needs without sacrificing accuracy on an application.
Case study #2: Our client’s claim was denied for alleged incorrectly-answered questions on the insured life insurance application. An insurer can only rescind a policy if it can show that an untrue statement or omission of material fact was made with the intent to deceive, and that the misrepresentation regarded the cause of death. This insurer could show neither, so we were able to get our client paid.
Missing Information on Insurance Application
When an applicant for an individual health policy fails to complete the application properly, insurance companies are more likely to increase premiums, reduce benefit payments, or deny benefits outright. The same happens if and agent fills an application out incorrectly.
Case Study #3: The insured disclosed that she was taking Nexium 40mg for acid reflux. Her beneficiary’s email was denied because of alleged material misrepresentation in that the insured failed to disclose that she was diagnosed with dyspepsia, gastroesophageal reflux disease with esophagitis, and related afflictions. Under Georgia law, the insurance company was on “constructive notice” that the insured was more seriously ill and should have inquired further when the application was received. We got the beneficiary paid!
Application omissions are particularly risky if an insurer discovers an omission within the two-year contestability period. If the insured dies within two (2) years of policy approval, an insurer can avoid paying benefits if it can prove that the cause of death conflicts with the approved application. Even when the contestability period has passed, an insurer may still avoid payment by showing that the applicant misrepresented an aspect of his or her health that may have affected approval. For example, if the insured dies of a heart attack within the contestability period, the insurer may deny benefits if the insured failed to report a history of high cholesterol on the application.
The Life Insurance Agent Was Negligent or Purposefully Lied on the Application
This happens! Read on for some real-life Case Studies about our clients.
Case study#4: The insured disclosed her heart complications and recent hospitalization to her insurance agent, who in turn neglected to disclose that on her life insurance application. Beneficiary’s claim denied. Because the agent’s knowledge is imputed to the life insurance company, we got the beneficiary’s claim paid.
Case study #5: The insured told his insurance agent that while he used to smoke, he quit a few months ago. The agent marked the question about smoking “no” and did not record that the insured had COPD and Hepatitis C. Claim denied. Again, the agent’s knowledge was imputed to the insurance company and we got the beneficiary’s claim paid.
Case study #6: The insured disclosed high blood pressure and hypertension to the insurance agent but the agent did not record the hypertension on the application. Again, the agent’s knowledge was imputed to company. Failure to disclose a material fact on an application is grounds for voiding the insurance contract only if fraudulent. Because the company could not show that the insured’s intent was fraudulent, we got the claim denial overturned and our client was paid.
Case study #7: The agent filled out the life insurance application for the insured, who was blind and had diabetes. The agent failed to disclose these on the application, however, and the insured signed it. Because the insured could not see the application, no fraudulent intent could be proven. We got our client’s claim paid.
Life Insurance Lawyers Recover for Misrepresentation on Application
If you believe that you or a loved one may have inaccurate information on an application for life insurance, you should contact the insurance company immediately to submit an amended application. You don’t want the beneficiary’s claim denied due to life insurance application mistake.
A life insurance company normally has 2 years to contest information on an application. If you are a beneficiary and have already been denied benefits based on an alleged misrepresentation or fraud regarding the information on the application, contact the Boonswang Law Firm to discuss the steps that we can take together to ensure you get paid.