The pointless lies that could cost you thousands

Millions of us are telling pointless lies that could cost us thousands. Find out more here.

Ever told a fib when applying for insurance? You’re certainly not alone. However, it seems that many Britons are telling totally unnecessary lies. In our efforts to minimise our premiums, millions of us are telling pointless porkies that could stop insurers paying out.

Damn lies and statistics

One in 14 (7%) of us have knowingly misled insurers when completing application forms, according to research by AXA.

And lower premiums aren’t the only reason people are telling fibs. Over half (51%) of non-disclosers questioned said they were just too embarrassed to reveal personal information during the application process - while 17% feared being turned down completely if the truth came out.

Worrying stuff. Any sort of deception may invalidate your whole policy, which means that around 1.5 million people in Britain potentially face having their claims turned down if they get found out.

All for nothing

And it seems that sometimes we hide the truth for no reason at all.

AXA found that 25% of the British population incorrectly believe that they will face hefty premium increases if they are honest about certain medical conditions or lifestyle habits:

Data provided by AXA

The people AXA surveyed are far off - insurance premiums are partly based on an assessment of medical history and lifestyle.

But the extent to which a health condition raises your premiums depends on a number of factors, including its severity and the way in which it is being treated.

So, for example, a history of high blood pressure (now well controlled by treatment) may not affect your premiums at all.

The good news is that most insurance comparisons are not anchored around the notion of a ‘perfect person’.

Research indicates that in the UK today, over half of people are overweight, some 20% suffer from depression, 80% suffer from some form of back pain and 50% have high cholesterol.

In other words, highlighting these factors on your application form will not necessarily mean you’re forced to pay a higher-than-average premium. Phew!

So what does make a difference?

It’s vital to be honest on your application for life insurance. If you’re not, and the worst happens, your dependents may not receive a settlement after you’ve gone.

So any non-disclosure or deception on your part could result in financial catastrophe as well as heartbreak for them.

That’s the gloomy part over. We’ve already had a look at personal medical history as a factor in your application. Here are the other main things life insurers take into account when working out your premiums:

Age: The lower your age, the lower your premiums are likely to be. This is because younger people are generally in better health and are less likely to claim in the first few years of the policy.

Gender: All other things being equal, you’re likely to be quoted a lower premium if you’re female. This is because women tend to live slightly longer than men, and so pose a lower risk to insurers.

Your BMI: If your Body Mass Index (BMI) is over 30, you’re defined as obese by the World Health Organisation. And if you’re obese, your premiums are likely to rise significantly, because the condition is linked to several health problems which make you a higher insurance risk.

Drinking: Regular, excessive alcohol consumption is also linked to health problems, so again, this is likely to raise your premiums.

Smoking: Of course, this can have a huge negative impact on your health - and consequently on your insurance premiums. However, some insurers will consider you a non-smoker if you haven’t had a puff in 12 months - so if you’ve recently quit, tracking one of these down could save you money.

Family medical history: The health of your immediate family is important to life insurers because it will allow them to assess the risk of you developing an hereditary illness.

Occupation: Obviously, some jobs involve a greater risk of physical harm than others. If you’re a member of the armed forces, for example, your premiums are likely to rise.

Hobbies and pastimes: Here again, insurers will weigh up the risk of physical harm your pastimes may cause. Any hazardous sports (like free climbing or parachuting) or other daredevil activities are likely to nudge those premiums upwards.

It’s not worth it!

At the end of the day, it’s not worth trying to pull the wool over insurers’ eyes. Insurance companies usually conduct very thorough checks before paying out large sums of money.

And if one small part of your claim is proved to be false, an insurer can reject the entire thing. So it’s in your (and your family’s) interests to bite the bullet and try to answer all the questions as honestly as you can.

And if it all adds up to a premium you can’t afford? You may then want to consider reducing the level of cover, to make the package more affordable.

This is a classic article which has recently been updated.

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