Be Honest on Your Insurance Application

Urge Family to be Honest on Your Insurance Application

A Family’s Life Insurance Claim Is Denied

What a sad situation for the children. A family man in his 30’s knew he needed life insurance to protect his wife and young children. Although he appeared to be in good health, he died from cancer just five weeks after the policy was issued. No one knew he was sick. Despite the shock and heartache, it was consoling to know that his family would be looked after, as he had a half million dollars of life insurance. Tragically, the life insurance claim was denied.

Lessons from the Investigation

When someone dies during the first two years of a new policy, there is always an investigation to ensure that the deceased was not aware of their illness when the policy was issued. In this case, it was confirmed that there was no indication he had cancer when it was issued. This client also initially applied as a non-smoker before it was discovered during the blood work that he was, in fact, a smoker. Subsequently, he was issued as a smoker. (Had he been issued as a non-smoker and it was discovered at any time in the future that he lied on the application about this fundamental issue, the policy would be denied.)

The problem for this person is that he failed to disclose that he was being treated for an uncommon health issue – one that is not too serious if under control. As it turns out, had he disclosed it, the company would have tested his blood for this issue, found it was not controlled, and either declined or postponed the policy.

The Takeaway – Be Honest and Disclose Everything on Your Life Insurance Application

The above only happens when something significant is not disclosed. He had a history of treatment for this condition which would be a standard issue if controlled, but a blood test done at time of issue by his doctor showed that it was not under control and this was discovered during the investigation after he died. The two months of premiums that were paid are being returned.

It is essential that questions be answered honestly and fully. A grieving family being left an illegitimate life insurance policy that is not paid out is psychologically much worse than having no insurance in the first place. There is a false sense of security for the family. His children will suffer financially. Had he been honest with us, while we would not have been able to place a policy for the full half million, there was an affordable option that would have at least paid off his significant mortgage.

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© 2003-2024, an Internet brand and property of I.D.C. Insurance Direct Canada Inc. All rights reserved. Last updated March 2022.

All product names, trademarks, and trade names are the property of their respective owners. The Insurance Council (BC, AB, SK, MB), Financial Services Commission (ON), Chambre de la Sécurité Financière (QC), The Superintendent of Insurance (NB, NL, PE, NS) are the provincial and federal authorities that regulate, supervise and enforce standards for life insurance professionals. IDC member websites include: Life Insurance Newspaper, Employee Benefits Newspaper

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