People cover up being a smoker or a healthy drinker, and people regularly give false information on their weight or health problems.
A study by Norwich Union of 2,500 customers found as many as one in 14 provided false information relating to their health or lifestyle. Other research showed a higher 15% of people who are not truthful when applying for insurance cover.
Currently insurers reject as many as 20% of claims due to misinformation, but this doesn’t deter people, where as many as 52% of men and 43% of women say they routinely lie about the state of their health in everyday life. Those who lie on insurance policies risk personal and financial disaster if they are found out.
Life insurance is a simple form of protection, which pays out a lump sum on the police holders’ death. These policies can be ‘for life’ or for a fixed term eg.25 years.
Over the past few years, life insurance premiums have fallen sharply as life expectancy has risen and competition amongst insurers has grown. But anyone outside the 'norm' - such as those who are overweight and those who smoke - will increasingly pay more for cover. According to financial website find.co.uk, a 20-year level term policy with a sum assured of £100,000 would cost about £13.50 a month for a 35-yearold male smoker. A non-smoker of the same age would pay about £8 a month - a saving of £64 a year or nearly £1,300 over 20 years.
There are other more simple ways to get better value of your life insurance premiums and save money without being fraudulent.
Insurers calculate your life insurance premium by using information about your health, age, occupation and lifestyle. Most people are unwilling to do measures such as losing weight or giving up smoking to get cheaper life insurance. To be eligible for discount you have to have quit smoking for at least one year to be classed as a non-smoker, but can wipe many pounds off your monthly premiums.
Recently a new life insurance policy was launched offering lower premiums to vegetarians. Animal Friends Insurance offered a 6% discount on its life insurance for non-meat eaters, because medical evidence suggested they were less likely to suffer from major illnesses than those who ate meat.
Norwich Union is now considering challenging the rest of its two million UK customers to come clean about their health status. People who have found to have been dishonest could see sharp increases in their premiums or even have the policies cancelled. Insurance fraud is covered under the Fraud Act 2006, which defines fraud as being committed when a person makes a ‘false representation.’ Using a fraudulent health insurance policy could result in up to ten years imprisonment, a fine, or both.
So its better to be honest on your life insurance, make steps to get discounts and seriously shop around for the cheapest policy.
Drew is an author of several articles pertaining to Life Insurance. He is known for his expertise on the subject and on other Business and Finance related articles.
