life insurance HEALTH STATEMENT
May 22, 2008 7:21 AM   Subscribe

My life insurance lapsed - and a new signed medical health statement is required - am I screwed if I lie?

I've had a $400,000 life insurance policy for about ten years or so. Recently the policy lapsed, due to a bank checking account change / automatic draw situation. The company, Liberty Mutual, says I can reinstate the policy and bring it up to date with the past due payment, but I need to fax them a "Health Statement." The statements asks: Since the date of the application of the above policy: "Have you had any illness or injury?" and "Have you consulted any physician or surgeon?"

The problem is, about two years ago I was diagnosed with Type II diabetes. I called my local (Friendly) representative for the company, who sold me the policy years ago, and he says just lie, and say that my health is fine. He also advised me to lie way back then, and say that I've never smoked pot, which I did, and continue to do occasionally. (Marijuana is the only thing that calms my leg shakes and neuopathy in my feet.) I'm 52 years old, fit, and doing my best to treat my diabetes. I've never smoked tabacco and I've never drank alchohol.

My question is: If I lie, and say "No" to these questions, is my estate and my loved ones listed as beneficiaries screwed when I die? Will my death certificate probably list my death as due to complications of diabetes, and thusly nullify the life insurance? Will the Life insurance company get a copy of my health records after I die, and see that I was diagnosed? Even if I die of a heart attack, or stroke, will the diabetes come into question, along with this new Health Statement? I'm sure that if I applied for a new policy, with the diabetes, my premiums would be impossible to afford.

What should I do? Any insurance industry folks out there, what to share the inside pitch? Please?
posted by Mr Chips to Work & Money (9 answers total)
They can use that as a basis to deny a payout. They will take your premiums though. Will they find out? Probably yes if you somehow die in any way related to diabetes, or if they bother to look into it.
posted by caddis at 7:43 AM on May 22, 2008

Re: MJ - NORML offers life insurance for smokers.

Dunno about the TII Diabetes though.
posted by unixrat at 7:46 AM on May 22, 2008

Yeah, do your loved ones a favor and write it down on the health statement. This is a common, manageable condition that won't destroy your premiums and your will feel better knowing that you are assuredly covered.

The marijuana, however, I would not mention.
posted by bluenausea at 7:49 AM on May 22, 2008

Premiums will probably go up, but that should be the only effect of telling the truth. I wouldn't risk lying about it.
posted by electroboy at 7:54 AM on May 22, 2008

Never lie to your insurance company, especially about something that can so easily be found out. Insurance companies don't like to pay out, don't make it easy for them to find an excuse.
posted by missmagenta at 8:09 AM on May 22, 2008

Life insurance sucks as a system because it disincentivises honesty and going to get regular checkups. Jerks.
posted by phunniemee at 8:23 AM on May 22, 2008

If you lie to them, and they find out about it, they won't pay out - at most, they'll return your premiums to your estate. You're taking a huge risk if you lie to them, especially since a diagnosed condition is going to show up on your medical records. Better to tell them your health situation honestly and pay the premiums required based on your health situation. That way you know you'll have the coverage that you think you have.
posted by gwenzel at 9:08 AM on May 22, 2008

When you die, the fact that you had diabetes will likely be part of the information the life insurance company gets about the case. I'd expect they're going to research when you were diagnosed with diabetes as a matter of routine.
posted by winston at 11:54 AM on May 22, 2008

Diabetes is a manageable condition but may affect your premiums. It is insurance fraud to lie about medical conditions and definitely not advised. The fact is your pot smoking is unlikely to be traced as I assume you keep that pretty secret. But your diabetes is on your medical record and easily discovered and researched.

While we deal mainly in life settlements and life insurance for seniors and really not set up to help you. You need a good broker to help you and I'd be very wary of one that recommends lying and commiting insurance fraud. He'll be long gone with his commission check and your family will suffer.
posted by Micklife at 8:23 PM on May 25, 2008

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