Keeping the facts and figures to self or not stating the truth while buying an insurance policy is a major blunder that many insurance seekers tend to indulge in. This makes it difficult for them to reap the benefits of insurance or file appropriate claims when needed. Hiding facts from life insurance will create problems for you.
An insurance policy is a long-term contract that is based on the Principle of utmost faith, which says that both the insured and the insurer will act honestly and reveal complete and accurate information to one another which is required under the contract being made. Not holding to this principle will result in the contract being considered null and void.
Now let’s understand what is a material fact or information? Any information which is asked in a proposal form related to your age, occupation, health status, family history, pre-existing disease, other life insurance policies that you possess, or any additional information which is imperative for the insurer to analyze the risk in your life before granting you life insurance.
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Why Concealment is a Strict NO NO!
Concealment or hiding maybe sometimes unintentional or intentional. Most of the time, the agents fill up the proposal forms on your behalf and also may state wrong information or hide material information to offer you lower premiums. It is very important that you read and fill out the proposal form on your own and in case you find any doubts or confusion in any field of the proposal form, then get in touch with the insurer to understand what is actually required to be filled. The proposal form forms the BASIS of Insurance.
Also, at times there is a moral hazard where in to seek undue advantage from insurance, people tend to conceal important information. Any concealment at the time of seeking insurance for any gains will cost you and your family at the time of claims and the insurer will consider the contract null and void resulting in repudiation of the claim on the basis of concealment. The entire intent of taking the insurance policy goes in vain.
Ways of Hiding Information
Since most people are not aware of the intricate workings of the insurance sector, they only focus on ways to get their premiums lowered. They don’t realize that there are enough checks and balances in the system that no matter what kind of a lie you’re saying or whatever means you’re employing to hide information, it can’t suppress truth forever! Let’s have a look at some of the ways people hide information and why it’s not a smart idea:
“Hiding facts from life insurance” would be problematic for you
1) Not giving out updated health conditions or hiding past medical ailments is one of the commonest ways to try and get lower premiums. However, if you do get hospitalized or something happens to you, it won’t take time for insurance companies to find out the truth based on expert medical investigation resulting in the rejection of claims.
2) Tobacco use is common in our country, yet some people believe that they can hide it as no one is going to come to their house to check it. The fact is, even if you’re not using tobacco in any form for the past 2-3 years, even then the insurer can find out about it. Science can help them find signs of smoking on their chest X-ray even if no nicotine is found in their bloodstream! Better be upfront rather than risk claim rejection!
3) Some customers try to quote higher salaries to get a higher sum assured. However, insurance companies are nowadays employing the services of private investigators, who would find out everything about the background of the customer before they offer you a policy or process your claims.
4) A customer might be following a sedentary lifestyle that is risk-prone to life-threatening diseases but hides it from the insurer. As mentioned above, if the insurer has any doubts about the information published in the form, a private investigator will be on your tail immediately!
5) Insurance providers charge higher premiums for dangerous professions like coal mining and the like. If you state a wrong profession, you might enjoy lower premiums when you’re alive, but it might boomerang when you aren’t around for your families!
6) Opting for policies that don’t ask for medical tests might look like a tempting proposition as you won’t have to reveal your real medical condition. However, those insurers charge a higher premium anyway, and if something happens to you, it’ll all come in the medical report that might result in claims rejection.
Reason Why people “Hiding facts from life insurance”
In the fear of getting rejection
As time passes, we also start moving from child to young and from young to old age. And by this time our body does not even have too much strength, our body starts leaving us. We believe that old age in India means suffering from diseases, and somewhere this is also true because in old age people consume more medicine than food.
In such a situation, if a person plans his retirement life and wants to buy an insurance policy. But in view of the pre-existing disease, he is afraid to buy the policy. If he goes ahead and agrees to buy the policy then it is certain. That he will hide facts means he will hide his pre-existing disease because in such a situation the insurance company is not ready to cover first. And secondly, even if the insurance company is ready, then the insurance premium becomes very expensive.
Family history
Sometimes our family history makes us proud. But in certain cases, our family history is so worst that we can’t even buy the policy for the protection of the family. Due to genetic disease in some families, it becomes a little difficult to buy insurance for the family. Genetic diseases like – diabetes, skin diseases, and many other diseases are passed on from generation to generation. And the number of diseases caused by this type of disease.
If so, the insurance company thinks a bit before doing the coverage. Insurers fix the term plan premium according to your current health condition and family medical history like genetic diseases, diabetes, etc.
The habit of smoking
If you have a habit of smoking then the insurance policy is might be a bit expensive for you, the insurance company first checks the risk on the priority mode, and after that, they are ready to cover you. As the problem and risk, so is the premium.
As you can see, you only gain in the short term by hiding crucial information from insurance companies. In the long run, it is a terrible idea that will only give you losses. It is better to provide accurate information and pay higher premiums to benefit from the insurance policies in the real sense.