Honesty is the best policy when applying for life insurance
By Tony Poland, AdvocateDaily.com Associate Editor
Knowing your medical history and being truthful can go a long way in avoiding a life insurance policy denial, says Oakville personal injury lawyer Jill Edwards.
Edwards, a partner with Edwards Pollard LLP, says it’s always a good practice “to be as honest and upfront with your health history as you can” when applying for a policy.
“Life insurance only comes into play when the person who filled out the application passes away, so we no longer have their evidence as to what happened during the application process, and a large number of these denials are based on misrepresentations,” she tells AdvocateDaily.com.
“I think it’s better to be honest and pay the proper premium so that you don’t get into these difficulties down the line because you’re not going to be there to fix them.”
Edwards says it can be easy to forget all of your health issues over the years, especially if they turned out to be nothing significant.
“For example, someone might say they never had any heart issues, yet when the insurer looks at the medical records, they find that some testing was done when the person complained of heart palpitations. However, it turned out to be stress,” she says. “So they would answer ‘no’ to a question about heart conditions, but when you look at their records, they complained of that particular symptom.
“So now we don’t have that person there to say ‘when I was filling out the application, I actually explained that to the agent and they checked off ‘no’ in that box.’”
Edwards says one of the ways a life insurance claim can be denied is if there is false information in the application that would have caused the insurer “to underwrite that policy in a different manner.”
“If they had known the truth, an insurer can either not issue the policy or charge a higher premium,” she says.
Edwards says when taking on a case where there has been a denial, she “will engage the help of an expert underwriter who has experience with life insurance policies and the underwriting process, and they will provide an opinion looking at the medical records to decide whether the insurer would have rated the policy differently and charged a higher premium.”
She says it is important for a person to document the process when taking out a life insurance policy.
In many instances when the application is made over the phone, the insurance company will record the conversation, Edwards says.
“That can sink your claim because you may hear the applicant blatantly saying something that’s incorrect,” she says.“But these recordings can also help when you have the applicant asking questions about the policy, offering information, and asking for clarification.
“So if it ever has to go to court, that person is no longer be with us, but we have exactly what transpired during the application process.”
Edwards says if you are applying in person, you can ask to record the conversation or take notes that you can file with your policy. Having someone witness the process would also be helpful.
She also advises being “as informed as you can about your health history” before filling out your application so you’re not guessing or forgetting something that may lead to a denial.
“It all comes down to whether the insurance company would have charged a different premium if they had known all the information. So even if it’s an honest mistake, that’s not enough to get around a denial,” Edwards says.
She says it’s also vital to keep the policy and any supporting documents or recordings of the application process in a safe place. And if the claim has been denied, seek advice.
“No matter what, when an insurance company denies a life insurance claim, you should always have a lawyer look at the policy and the denial letter to see if there is a chance of being able to fight it,” says Edwards.