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Should you lie on life insurance applications? Obviously we’re going to tell you “no.” Sure, some people will still try. Be warned, there are consequences when you are found out. And what seems like a little lie now can end up costing your family a lot.
Sure, people lie. Take the results of a survey of over 2,000 people conducted by Harris Poll for the personal finance site Nerdwallet in March. Eleven percent said it’s acceptable to lie about tobacco habits for lower life insurance rates.1
In addition, 16 percent said it was acceptable to lie about marijuana use to secure lower life insurance rates.
The survey was part of a general investigation into what kind of money lies are viewed as “acceptable” or “unacceptable” by the general U.S. population. The questions ranged from using someone else’s online account for movies or music (33 percent thought that was okay) to lying to the IRS about under-the-table income (24 percent).
Generally the survey found that older Americans, 65 and above, are less likely to find lying about money matters acceptable. Indeed, the survey found that only 11 percent of seniors believe it is acceptable to use someone else’s online account for movies or music, versus 39 percent for folks aged 18-64.
Another one of the more general takeaways from the survey was that men are more likely to say financial lies are acceptable than women.
Indeed, on the life insurance and tobacco use question men were more likely to say lying was acceptable (14 percent versus 7 percent for women).
The life insurance and tobacco use question was the least popular lie in the survey, which may reflect general knowledge that tobacco use will likely be discovered. Indeed, the blood test required for most life insurance policies typically reveals nicotine and other chemical evidence of smoking, be it tobacco or marijuana.
And most insurance policies have provisions for reducing or sometimes even eliminating payouts when fraud is detected. Typically if a life insurance company finds out you lied about smoking, the payout to your beneficiaries would be reduced by the difference between the rate you paid and the smoking rate you should have paid. That could really alter the protection you planned for your family. (Calculator: How Much Insurance Do You Need?)
So lying now could cause problems for your family and loved ones later. And isn’t one of the major points of life insurance is to ease things for your family at what is likely a very difficult time?