What happens if you conceal an illness when purchasing term insurance?

Concealing information about an illness or your health status when purchasing term insurance can prove costly. In the event of the policyholder's death, the insurance company may refuse to pay the claim.

Many people purchase term insurance to protect their families from financial hardship in the event of their death. It is a type of life insurance where the policyholder is covered for a specified period. If the policyholder passes away during this term, the insurance company pays the sum assured to their family or nominee, in accordance with the policy terms. This can assist the family with household expenses, children's education, and the repayment of debts, such as home loans.

However, a minor oversight at the time of purchasing the policy can create significant problems for the family. Sometimes, individuals conceal information about their illnesses or health conditions to secure a lower premium or to make the policy approval process easier. Doing so, however, can lead to serious consequences later on.

What are the consequences of concealing an illness?

Denial of the insurance payout: If an investigation following the policyholder's death reveals that a pre-existing illness was concealed, the insurance company may reject the claim. In such a scenario, the family will not receive the insurance payout.

Cancellation of the policy: If the insurance company discovers that essential information was withheld at the time of purchase, the policy may be cancelled in accordance with the applicable rules. The status of the premiums already paid will depend on the specific case and the governing regulations.

What should you do if you have a pre-existing illness?

If you have a pre-existing condition—such as diabetes, high blood pressure, or any other illness—you must disclose this to the insurance company. Ensure that all relevant health-related information is accurately recorded in the application form. While concealing an illness might result in a lower initial premium, it can lead to significant difficulties for your family when they attempt to file a claim later.