Misstatement of Age for a Life Insurance Policy

Life insurance companies rely on potential customers to tell the truth about their age and health in order to determine the correct premium to charge for life insurance. While reporting falsely favorable information may yield lower premiums, be sure you understand the possible ramifications.

Identification

A misstatement of age occurs when you portray yourself as younger than your actual age. If your date of birth is entered incorrectly or the numbers are illegible, this is not considered a misstatement of your age. If you purposefully misstate your date of birth, however, this will be considered lying on your life insurance application.

Significance

Your life expectancy is based in part on your reported age, so misrepresenting your age means that you might pay a premium that is lower than you otherwise would pay. As a result, the risk that the insurance company is undertaking to insure you is greater than your reported age indicates.

Disadvantages

Untruthfulness on your life insurance application may result in criminal charges as well as modification or revocation of your life insurance policy. Obtaining life insurance in the future may be more difficult. You must disclose when applying for life insurance whether you've ever been turned down by another insurance company or had a policy revoked. If so, you must explain why. A prospective insurer may gather information from your old insurance company. Having previously falsified an application may result in denial of coverage or significantly higher premiums.

Misconceptions

A common misconception is that the insurance company will automatically file criminal charges for a misstatement of age. This is not always true, but the insurance company may do so at its discretion. Additionally, the insurer may revoke the policy even after you die and deny the death benefit to your beneficiaries.

Prevalence

In its December 2009 report, the Coalition Against Insurance Fraud reported that although life insurance fraud was not as prevalent as many other types of insurance fraud, it was nevertheless on the rise in some areas. Of the state fraud bureaus submitting information, approximately 57 percent reported no change from the normally low number of life insurance fraud cases, but about 40 percent reported increases.

References

• "Life Insurance;" Kenneth Black, Jr., Harold D. Skipper, Jr.; Prentice-Hall Inc.; 1994
• "Practicing Financial Planning for Professionals (Practitioners' Edition), 10th Edition"; Sid Mittra, Anandi P. Sahu, Robert A Crane; 2007
• Coalition Against Insurance Fraud: The Economy and Fraud Fighting on the State Level